Savers redeemed $1.20 billion of Series I savings bonds in October and bought $424 million, according to the Treasury's Monthly Statement of the Public Debt. That shrank the stock of I bonds outstanding by $774 million in a month, to $85.02 billion, the largest monthly fall since January 2025.
The timing is the interesting part. On 1 November the Treasury raised the fixed rate on new I bonds to 1.40 per cent, from 0.90 per cent, the highest since 2006, TreasuryDirect says. New bonds bought through 30 April 2027 earn a composite 5.51 per cent for their first six months.
How unusual were October's redemptions?
Unusual for October. Redemptions tend to cluster in January, when holders cash bonds for a new tax year and buy their next $10,000 allowance. October's $1.20 billion was the most in any month since January 2025, and the most outside a January since April 2024, by our ranking of the monthly statements.
| Month | Issued | Redeemed | Outstanding at month end |
|---|---|---|---|
| January 2024 | 1,378.4 | 2,959.9 | 94,516.9 |
| January 2025 | 709.3 | 1,591.5 | 89,033.6 |
| October 2025 | 461.5 | 503.5 | 86,121.0 |
| June 2026 | 477.4 | 464.6 | 86,230.8 |
| July 2026 | 462.8 | 468.2 | 86,225.4 |
| August 2026 | 414.6 | 545.6 | 86,094.3 |
| September 2026 | 420.1 | 722.4 | 85,792.0 |
| October 2026 | 424.1 | 1,198.4 | 85,017.7 |
Redemptions more than doubled between August and October, while purchases stayed flat. The statement does not record who redeemed or why, and it will not show until early December whether the money came back in November at the higher rate. So the link to the new fixed rate is an inference. It is a plausible one: a holder who cashes a bond in October and buys a new one in November gets the higher fixed rate for the life of the new bond.
The stock of I bonds peaked at $99.02 billion in July 2023, after a buying spree in 2022, when the Treasury sold $38.8 billion of them as inflation rates ran high. It has fallen by about $14 billion since.
What does a switch earn?
The composite rate on an I bond has two parts: a fixed rate set when the bond is bought, which never changes, and an inflation rate reset every six months. For November 2026 to April 2027, the inflation part is 2.04 per cent for six months, or 4.08 per cent a year. Households surveyed by the New York Fed expect prices to rise 3.9 per cent over the next year, so the inflation part is the bigger share of what an I bond pays.
Every I bond issued between May 2020 and October 2022 has a fixed rate of 0.00 per cent, according to TreasuryDirect's rate history. Those bonds will earn 4.08 per cent for their next six-month period. A new bond earns 5.51 per cent. The gap, 1.43 percentage points, is mostly the new 1.40 per cent fixed rate, and it lasts as long as the new bond is held.
On $10,000, the most one person can buy electronically in a calendar year, that is about $143 a year, by our arithmetic. The cost is the early-redemption penalty: a bond cashed in before five years loses its last three months of interest. On a $10,000 bond earning 4.08 per cent that is roughly $102, so the switch would pay for itself in about nine months. Bonds bought before November 2021 are already five years old and carry no penalty. Bonds bought in 2022 do, until their fifth anniversary in 2027.
The arithmetic is simplified. It ignores the interest already accrued on an older bond, which raises both the penalty and the amount that can be reinvested beyond the $10,000 limit, and it ignores tax: redeeming a bond makes its deferred federal interest taxable that year.
Is 1.40 per cent a good real rate?
It is the best I bond fixed rate in 20 years, but Treasury's marketable inflation-linked bonds pay more. The Federal Reserve's five-year TIPS real yield averaged 2.53 per cent in October and was 2.56 per cent on 10 November.
| Rate set | I bond fixed rate | 5-year TIPS yield, prior month | Fixed rate as share of TIPS |
|---|---|---|---|
| 1 November 2006 | 1.40% | 2.51% | 56% |
| 1 November 2022 | 0.40% | 1.71% | 23% |
| 1 November 2023 | 1.30% | 2.46% | 53% |
| 1 November 2024 | 1.20% | 1.68% | 71% |
| 1 November 2025 | 0.90% | 1.29% | 70% |
| 1 May 2026 | 0.90% | 1.34% | 70% |
| 1 November 2026 | 1.40% | 2.53% | 55% |
The Treasury does not publish a formula for the fixed rate. On our comparison, apart from 2022, when real yields had just turned positive, it has set it at a little over half to about seven-tenths of the five-year TIPS yield. This time it chose the low end of that range. A saver willing to buy TIPS through a broker or at auction can lock in more than a percentage point of extra real yield, though with price risk if sold early, which I bonds do not carry.
What to watch
The Treasury's November statement, due in early December, will show whether purchases jumped at the new rate. The next fixed rate will be set on 1 May 2027, and the inflation part will be based on consumer prices between September 2026 and March 2027, a period in which inflation has been running near 4 per cent on our estimate.
Monthly issues, redemptions and amounts outstanding of Series I savings bonds are from the Treasury's Monthly Statement of the Public Debt, Table III (nonmarketable securities), retrieved from the Fiscal Data API on 13 November 2026, in millions of dollars. Fixed rates, the semiannual inflation rate, composite rates, the $10,000 annual purchase limit and the early-redemption rules are from TreasuryDirect, retrieved on 13 November 2026. Five-year TIPS real yields are the Federal Reserve's H.15 series DFII5 via FRED. Monthly rankings, October averages of the TIPS yield, the composite rate on a zero-fixed-rate bond and the switching arithmetic are this publication's calculations; the penalty estimate is simplified and ignores accrued interest. The analysis is our own.
Topics moneyinflationhousehold financeTreasuryinterest rates
