With inflation hovering at 2.7% year over year, leaving your money in a basic savings account can cost you money; the average interest rate on a savings account is just 0.38%. That means the interest you earn on your savings account may not keep pace with inflation.

To maximize your return, stashing your money in a Series I savings bond (more commonly known as an I bond) or a high-yield savings account (HYSA) can be a smart alternative. Both of these products offer higher returns than traditional savings accounts, but there are some key differences to be aware of before deciding where to put your money.

Series I bonds are available through the U.S. Department of the Treasury, backed by the full faith and credit of the U.S. government.

The appeal of I bonds is in their two-pronged approach to interest: I bonds earn both a fixed rate of interest and a variable rate. The fixed rate stays the same for the life of the bond. The variable rate is tied to inflation and changes twice a year to coincide with changes to the Consumer Price Index for all Urban Consumers (CPI-U) — a benchmark that economists use to calculate the change in prices that consumers price for common goods and services.

What does that mean for you? You earn a guaranteed rate of interest with the fixed-rate portion of the I bond, but you'll also earn the variable rate. Because I bonds can change along with market conditions, they can be a useful hedge against inflation.

For bonds issued between May and October 2025, the combined rate — the I bond rate calculated from the fixed and variable rate — is 3.98%.

I bonds earn interest for 30 years. Interest is earned monthly, but it's compounded, or added to the principal, every six months. Once you've held the bond for at least 12 months, you can cash it in. However, if you cash in I bonds before you've held them for at least five years, you'll sacrifice three months of interest.

Guaranteed return: Because I bonds have a fixed-rate component, you have a guaranteed rate of return on your money. Right now, the fixed-rate portion is 1.10%.

Higher rate of return: Currently, the combined rate of I bonds is set at 3.98%, which is significantly higher than the average return you'd find with a traditional savings account

Exempt from state or local taxes: Although Series I bonds are subject to federal income taxes, they're exempt from state or local taxes, helping you save money.

Maximum limits apply: You can only buy up to $10,000 in electronic I bonds. (Previously, you could purchase an additional $5,000 in paper I bonds with your tax refund for a combined maximum of $15,000 per year, but paper bonds are no longer offered as of January 1, 2025.) If you're trying to save a larger sum, you'll have to find another tool for the excess amount.

Must be held for one year: I bonds cannot be redeemed or cashed until you've held them for at least 12 months. If you have an emergency expense within the first year of owning an I bond, you won’t be able to tap into your bonds to cover the cost.

Some withdrawals will result in loss of interest: Although you can cash in an I bond after 12 months, redeeming it within the first five years of its purchase will cause you to lose three months' worth of interest.

Traditional savings accounts are tools for saving for emergencies or other financial goals. However, traditional savings accounts have low APYs, so an HYSA can be a valuable alternative.

Often available from online banks and credit unions, HYSAs provide significantly higher-than-average rates; among the accounts we identified as the 10 best high-yield savings accounts today, the highest APY available is 4.3%.

Savings accounts allow you to transfer money to checking accounts or brokerage accounts quickly and easily, and there's no penalty for withdrawing money before a certain period of time has passed.

However, that rate is variable, and it can change at any time, so there's no guarantee of future returns.

Read more: How often do high-yield savings account rates change?

Liquid: With a savings account, you aren't required to leave your money untouched for months at a time. You can transfer money or make withdrawals without losing the accrued interest.

Higher-than-average rates: HYSAs provide substantially higher APYs than you'll find with other deposit accounts, including traditional savings accounts, CDs, or money market accounts.

Low deposit minimums: Many HYSAs have no minimum deposit requirement, so you can open an account with $0.

May have monthly fees: Some HYSAs charge monthly fees that can only be waived if you meet certain requirements, such as maintaining a minimum balance or receiving direct deposits.

Rates can change: The rates on HYSAs are variable, and banks or credit unions can change the rates at any time.

Read more: How much money should you keep in a high-yield savings account?

Series I bonds and HYSAs can be useful tools for fighting inflation. When deciding which option is better for you, consider these key factors:

Initial investment: HYSAs usually require $0 to open an account, while an I bond requires at least $25.

Maximum limits: There is no maximum amount you can deposit into a HYSA (though FDIC and NCUA insurance only cover up to $250,000). By contrast, there is an annual maximum of $10,000 in digital I bonds.

Compounding: With HYSAs, interest is typically compounded daily and added to your account monthly. With I bonds, interest is earned monthly, and it's added to the bond's principal value twice per year.

Fees: I bonds don't have monthly fees. Although there are fee-free savings accounts, some HYSAs do charge monthly fees.

Rates: The rate of an HYSA can change as market conditions fluctuate. With I bonds, there is a fixed rate of interest and a rate that's tied to inflation, so they provide more surety.

Which type of account makes the most sense depends on your goals and intended use for your money.

HYSAs provide quick and easy access to your money, and the best HYSAs offer significantly higher-than-average rates. However, those rates can decrease over time.

I bonds may be a better option for those who want the combination of guaranteed returns and a variable rate that changes along with inflation.

Whether or not your savings can keep pace with inflation often depends on what kind of savings account you have, as well as the current inflation rate. Traditional savings accounts, for example, tend to pay very little interest and do not outpace inflation (the national average rate is just 0.38% as of July 2025, according to the FDIC).

However, other accounts, such as high-yield savings accounts, money market accounts, and CDs, currently pay upwards of 4% APY — well above the present inflation rate of 2.7%.

Although I bonds are considered a safe and effective way to save money, they do have some downsides.

For one, you may only purchase up to $10,000 per year in I bonds, so they’re not the best choice if you’re looking to save a larger amount of money. I bonds also have a longer time commitment in order to achieve the highest yield; you must wait at least 12 months to cash in your bond, and it fully matures after 30 years. Finally, because a portion of the rate is variable, based on current inflation, the rate can fall significantly — sometimes to near zero — meaning your returns could be lower than other investments.

Unfortunately, it’s not possible to predict the future value of an I bond. Although an I bond’s fixed rate remains the same throughout its life, the semiannual inflation rate can vary. That said, an I bond will at least hold its value and cannot lose money.

Savings bonds are a low-risk way to earn interest on your savings. A savings bond is essentially a loan you make to the government — on which you earn interest for up to 30 years.

Savings bonds originated in 1935 with President Franklin Delano Roosevelt, and there have been many different types over the years. They’ve helped finance government programs and projects, from building roads to funding schools and even financing World War II.

Whether you have decades-old paper bonds or an electronic bond you purchased last year, read on to learn more about the different types of savings bonds and how they each work.

Read more: 10 best high-yield savings accounts available today

Savings bonds allow the public to lend money to the federal government and receive guaranteed interest in return. The government issues the bonds, and individuals can buy them in any amount ranging from $25 to $10,000 (or $50 to $5,000, if buying paper I bonds).

Savings bonds are considered a risk-free investment. They’re backed by the full faith and credit of the United States government and guarantee interest for up to 30 years.

Savings bonds are zero-coupon bonds. That means rather than paying out interest incrementally, the owner of the bond receives all of their earned interest at maturity, or whenever they cash in the bond. Savings bonds reach maturity — and stop earning interest — after around 20 or 30 years, depending on the type.

Different kinds of savings bonds can earn either a fixed or variable interest rate. While savings bonds guarantee interest, they do have some limitations. You can’t redeem them until you’ve owned them for at least one year. And if you redeem them within five years, you’ll miss out on the last three months’ worth of interest earnings.

To add to saving bonds’ security, you can only cash bonds that you own, and no one else (unless they’re authorized) can cash your bonds. You can even request a replacement if you lose a paper savings bond.

Savings bonds also have some tax advantages. You don’t have to pay state or local income taxes on your bond earnings, and you may not have to pay federal income taxes if you use the earnings for higher education.

You can buy electronic savings bonds online through the TreasuryDirect website. While paper bonds are less common these days, you can still buy paper I bonds — but the only way to do so is with your IRS tax return.

There have been many types of savings bonds over the years. Some are still available for purchase, and some aren’t. They vary in how they earn interest, how you buy them, and how you redeem them.

Series EE bonds, or EE bonds, are available to purchase electronically from TreasuryDirect (though you may have paper EE bonds that were purchased before they migrated online). EE bonds can earn interest for up to 30 years, and interest compounds semiannually. As of May 2005, new EE bonds earn a fixed interest rate for 20 years. Any EE bonds you buy now are guaranteed to double in value over 20 years.

You can buy EE bonds for any amount between $25 and $10,000 per calendar year.

To cash in electronic EE bonds, you’ll need a TreasuryDirect online account. When it comes to paper EE bonds, you have a couple of options. Some banks cash bonds for their customers, so you can see if your bank offers this service. Otherwise, you can mail in your bonds, along with some paperwork, to Treasury Retail Securities Services. If you’re cashing in more than $1,000, you’ll have to get your paperwork notarized.

I bonds earn interest for up to 30 years unless you cash them in earlier. Like EE bonds, interest on I bonds compounds semiannually.

The interest rate for Series I bonds changes every six months. The rate comes from a combination of a fixed interest rate and an inflation rate.

Unlike EE bonds, you can buy electronic or paper I bonds. But the only way to buy paper I bonds is using your IRS tax refund. When you buy an electronic I bond, you’ll receive the interest automatically when the bond matures. But you’ll have to submit your paper bond in order to cash in your earnings.

Electronic I bonds have the same limits as EE bonds — you can buy up to $10,000 worth of bonds per calendar year, with a minimum of $25. However, if you go the paper I bond route, You can only buy between $50 and $5,000 in increments of $50, $100, $200, $500, or $1,000.

Cashing I bonds works the same as cashing EE bonds. You can cash electronic bonds online through TreasuryDirect, and you can cash paper bonds at a bank or by mail.

Read more: I bond vs. high-yield savings account: Which is better for beating inflation?

HH bonds were for sale from 1980 to 2004 and are no longer available for purchase. They earn interest for 20 years, so the last HH bonds will mature in 2024.

Unlike EE bonds and I bonds, there are no electronic HH bonds — they came in paper form with $500, $1,000, $5,000, and $10,000 denominations. HH bonds earn interest every six months and pay interest semiannually via direct deposit. The only way to cash in an HH bond is through Treasury Direct via direct deposit — you can’t cash in at a bank.

There are several other retired savings bonds that are no longer available but that you may still have lying around somewhere. These include:

Series A, B, C, and D bonds

Series E bonds

Series F bonds

Series G bonds

Series H bonds

Series J bonds

Series K bonds

A variety of bonds for special causes, like Armed Forces Leave Bonds and Postal Savings Bonds

If you have any retired bonds in your portfolio, you can find out what they’re worth and how to redeem them online at TreasuryDirect’s website.

Certificates of deposit (CDs) and bonds are relatively safe personal finance tools you can utilize to grow your money over time. But while CDs and bonds are both low-risk investments, the two function very differently — understanding their differences can help you determine which option is better for you.

If you have cash to invest and aren’t sure whether to put it toward CDs vs. bonds, here's what you need to know.

A CD is a type of savings account at a bank or credit union that offers a fixed interest rate on your balance in exchange for leaving your money in the account for a specified period of time. CDs tend to have higher rates of return than traditional savings accounts. Depending on the financial institution, CD terms can range from one month (short-term CDs) to 10 years (long-term CDs). Banks an credit unions often have a minimum deposit you must meet before you can open a CD account.

In most cases, you can't add additional funds to your CD after your initial deposit or withdraw any funds from the CD until it reaches its maturity date. If you do, you'll be charged an early withdrawal penalty. If you think you’ll need your cash sooner than later, avoid CDs that require a long-term investment and opt for one with a term of several months to one year.

After a CD matures, it'll typically renew automatically for the same period. However, you'll usually get a window of seven to 14 days to withdraw your funds or add more money to your balance.

A bond is a type of investment in which you, as the investor, loan money to the bond's issuer, which may be a company or a government agency. In exchange, you'll receive a fixed interest rate and recurring payments of that earned interest — typically semi-annually — until the bond matures.

For example, if a bond has a $1,000 face value and a 6% interest rate, you'll receive $30 in interest payments every six months.

Depending on the type of bond, the maturity date can be anywhere from a few weeks to 30 years in the future. Throughout the bond's term, its value may fluctuate according to market interest rates — as interest rates go up, for instance, bond values go down. Once the bond matures, however, you'll receive the face value.

Although it's possible for investors to buy individual bonds, usually in $1,000 increments, it's more common to buy them through mutual funds and exchange-traded funds, or ETFs.

As you think about where to put your money, you may be wondering, is a CD a good investment? What are the risks associated with bonds? Here's what you should keep in mind.

CD terms can range anywhere from one month to 10 years, and in most cases, you can't access your money without paying a penalty until your CD matures. Some financial institutions offer penalty-free CDs, but they typically offer lower interest rates than standard CDs.

Depending on the type of bond you buy, terms can range from a few weeks to 30 years. However, you're not stuck with the investment for the full term; you can sell your bond at its current value at any point.

Also, if you're buying bonds through mutual funds or ETFs, you can sell your shares at any time.

The Federal Deposit Insurance Corp., known as the FDIC, and the National Credit Union Administration, or NCUA, offer you financial protection in the event that your bank or credit union fails. Because banks and credit unions offer CDs, your funds are typically NCUA- or FDIC-insured for up to $250,000 per depositor, per insured bank, for each account category.

On the other hand, bonds are issued by corporations and U.S. government agencies. Bonds purchased from government agencies tend to be safe, and bonds purchased through a brokerage firm may be insured for up to $500,000 by the Securities Investor Protection Corp. if the broker fails.

However, if you purchase a bond from a corporation and the company goes bankrupt, you risk losing your investment.

Returns for CDs and bonds can vary significantly, and in most cases, bonds offer higher returns, albeit with more risk involved.

The best CD rates will vary based on a number of factors, including the term length, the financial institution, and the overall interest rate environment. Many traditional bank or credit union CDs offer very low interest rates — typically expressed as an annual percentage yield, or APY. However, you may find online banks and financial institutions offering high-yield CD rates to compete for deposits. The difference may be huge: The corner bank might offer 1% even as an online competitor pays 4% or better.

Bond returns also can vary significantly depending on the type of bond and the risks associated with it. For example, bonds issued by the US Treasury tend to be the safest, but they also offer the lowest returns.

In contrast, corporate bonds can offer higher returns — particularly if the company has a less-than-stellar credit rating — but they also carry the highest risk of default.

Unless you opt for a penalty-free CD, you'll be assessed a fee for accessing your funds before your account matures. A common penalty may be 90, 180, or 270 days' worth of simple interest.

If you sell a bond before it matures, you'll miss out on future interest payments and the final par-value payment, but there are no penalties.

CDs are considered a risk-free place to put your money because, barring an early withdrawal penalty, your principal balance won't go down. And as long as you don't have more than the maximum insurance amount set by the FDIC or NCUSIF, your funds are safe even if your financial institution fails.

That said, CD rates are typically lower than the prevailing inflation rate, so your money can lose spending power over time.

While bonds tend to be less risky than stocks and other types of investments, they still carry different types of risk, including:

Interest rate risk: If interest rates go up, the price of your bond will fall, which can result in a loss if you sell before the bond’s term is up.

Credit risk: When buying corporate bonds, review the company's credit rating. While some bonds may offer higher interest rates, the issuer may be at risk of defaulting on its payments, leaving you at a loss.

Liquidity risk: While you can sell a bond at any time, there may not always be a buyer available. And if interest rates go up significantly, you may be hesitant to sell the bond at a deep discount.

Inflation risk: Depending on the type of bond, you may not get a high enough return to outpace inflation. This is particularly true for short-term Treasury bills.

Because CDs and bonds are fundamentally different, it may be easy to know which one is the right fit for you. If you're unsure, however, here are some scenarios where it makes sense to opt for a CD:

You won't need access to your money until the CD matures

You're concerned about interest rates going down and want to lock in a high rate

You don't want to risk your principal balance

You don't want to spend time researching bonds to find the right fit

You want to avoid the temptation to spend your savings

You have a large purchase coming up at a specific time

You may consider buying bonds instead of putting money in a CD if any of the following is true:

You want to diversify your investment portfolio with safer investments

You want to receive steady income payments

You aren't concerned about the risks associated with bonds

You expect interest rates to go down in the near future

Issued by the U.S. Treasury, savings bonds are relatively safe, long-term investments that mature 30 years after the original purchase date.

For most of us, 30 years is a long time to hold a single investment. The value of your investment can also change considerably during that time. So if you’re wondering what your savings bond is worth, there are simple methods for calculating the value; the one you use will depend on the type of bond you have.

Read more: What are bonds, and how do you invest in them?

The U.S. Treasury currently issues two types of bonds:

Series EE bonds: These bonds earn interest monthly for 30 years. As long as you hold it for at least 20 years, the Treasury guarantees that a Series EE bond will double in value, regardless of the interest rate.

Series I bonds: Intended as a hedge against inflation, these bonds also earn interest monthly for 30 years. Unlike Series EE bonds, however, the interest rate on Series I bonds is made up of two parts:

A fixed rate, set at the time of purchase and remains the same for the bond’s life.

A variable rate, adjusted every six months based on inflation, measured by the Consumer Price Index for All Urban Consumers (CPI-U).

Read more: I bond vs. high-yield savings account: Which is better for beating inflation?

Both types of savings bonds are issued electronically through the official Treasury website. However, you can also get paper versions of I bonds if you use your federal tax refund to purchase them.

Note that in the past, the Treasury issued other types of savings bonds, such as Series HH bonds, but has since retired them. These older bonds were originally issued in paper form but are no longer available for new purchases.

Read more: Types of U.S. savings bonds and how they work

Finding the value of an electronic savings bond is as simple as visiting the U.S. Treasury website: TreasuryDirect.gov.

Once on the site, click “log in,” then click “next.” Then, enter your account number. You may be prompted to enter a one-time passcode (OTP), which TreasuryDirect will send to your email. If so, enter the code you receive in your email and submit, then do the same with your password.

After logging in successfully, you will be in the My Account section. On that page, you will find a section called “Current Holdings,” which shows the current value of all your holdings, including savings bonds.

If you have more than one type of savings bond, you can see the value of each type by clicking the Current Holdings button in the menu at the top of the page. You will then see a separate holdings page, showing the value of your Series EE and Series I bonds.

Unlike electronic savings bonds, paper bonds are not tracked via your online account. Since you can’t quickly look the values up, you must calculate them manually. Fortunately, there is a paper savings bond calculator on the TreasuryDirect website that lets you quickly calculate the value of paper bonds.

This calculator determines the value of a paper bond based on its series, issue date, and denomination. You can also enter the bond’s serial number for later reference, though this step is optional.

To calculate the value of a paper savings bond:

Access the calculator on the TreasuryDirect website.

Enter a date for which you’d like to know the bond’s value.

Enter the type of bond and dollar amount.

Enter the serial number (optional, to track the bond later).

Enter the issue date (month and year).

Click calculate.

Read more: How to cash a savings bond

Two of the biggest factors affecting bond values are interest accrual and the bond’s value doubling if you own Series EE bonds. Interest can be a big factor, particularly because savings bonds can earn compounding interest, where you can earn interest on top of the interest you earned previously.

Because Series EE bonds have fixed interest rates and Series I bonds have variable rates, the amount of interest each type earns can vary significantly over 30 years. For instance, if you purchase a Series EE bond with a 2.5% interest rate, you may earn much less than you would with a Series I bond if interest rates increase over time.

To illustrate this, we can compare a $1,000 Series EE bond issued in February 2001 to a Series I bond issued in the same month. The current value of the Series I bond as of Feb. 20, 2025, is $4,148.00, while the value of the Series EE bond is just $1,152.00. Series I bonds have a higher interest rate in that period, leading to a much larger increase in value.

This can also have a significant impact on a bond’s resale value. It is possible to sell savings bonds at any time on the open market. However, if you have Series EE savings bonds with a low interest rate and market interest rates increase, the value of your bond will decrease. This is because it earns less interest than newly-issued bonds.

The value of a 30-year bond today depends on several factors, including the issue date, the bond type, and the dollar amount denomination. A $50 savings bond you purchased last year likely hasn’t changed much in value. Conversely, a $5,000 bond you purchased 25 years ago may be worth much more than it was when you purchased it.

Remember that you can quickly see the value of 30-year electronic bonds by logging into TreasuryDirect.gov. For old paper bonds, use the paper savings bond calculator on the TreasuryDirect website.

Savings bonds, which are low-risk investments you purchase through the U.S. government, take 20 or 30 years to mature. But they can be cashed out as early as a year after you purchase them, or even sooner if you're facing a natural disaster.

For electronic savings bonds, you can easily cash one out online. But paper bonds sometimes require a visit to a bank or a notary public. To save yourself some trouble, you might try converting yours to an electronic bond first.

Cashing out your savings bond early can also be worth doing under certain conditions, but before you make the move, make sure you weigh the potential loss of interest and tax implications.

Your options for cashing out a savings bond depend on the type of bond you own. To get started, look at your bond type and compare the available options listed below.

If you have an HH, E, EE, I bond, or Savings Note, you can cash it by mail. Paper bonds are no longer issued, but if you do have an old paper EE or I bond, you may want to convert it to an electronic bond through TreasuryDirect so you can cash it online instead.

Here's how to cash a savings bond by mail:

Visit a notary with your savings bond, photo ID, and an unsigned FS Form 1522.

Once you’re together in person, sign the FS Form 1522 and have it certified.

Mail the unsigned bond and signed FS Form 1522 to the U.S. Department of the Treasury at the correct P.O. Box:

Treasury Retail Securities Services. Minneapolis, MN 55480-0214

P.O. Box 214 (paper E, EE, or I bonds)

P.O. Box 2186 (H bonds)

P.O. Box 9150 (HH bonds)

Minneapolis, MN 55480-0214

You can cash a paper Series EE, E, or I bond at a bank that provides bond-cashing services. Banks have a lot of variation in their policies, so check to see what your bank requirements are before visiting. For example, Capital One and USAA don't cash savings bonds at all, and U.S. Bank requires you to have a checking, savings, or money market account that's been open for five years.

Here's what the process usually looks like:

Visit your bank or an institution that will cash bonds for non-customers.

Present your ID.

Confirm your Social Security number and address.

Sign the bond.

Make sure the bank employee stamps the bond to certify your signature.

To cash your electronic savings bond, follow these steps:

Log in to your TreasuryDirect account.

Go to Manage Direct.

Follow the link for "cashing securities."

Choose the bond number and amount you want to redeem.

Select the bank account where you want the funds deposited.

Click "submit."

You might have to pay federal income taxes on the interest your savings bond earns. For EE and I bonds, there could be an exception if you use the money for qualified higher education expenses such as tuition and certain fees, but you may also be subject to other taxes depending on the situation:

Federal: Estate, gift, and excise taxes

State: Estate or inheritance taxes

After you cash your bond, you'll need a form 1099-INT to report the interest on your tax return. You'll find this form in your TreasuryDirect account the following January after you cash in the bond, or you'll receive it from the financial institution that cashes your savings bond.

You can cash in your savings bond long before it matures, as long as you've held it for the minimum retention period of 12 months and it's worth $25 or more. To find the value of a paper bond, use the TreasuryDirect's Paper Savings Bond Calculator. For electronic bonds, log in to TreasuryDirect.

You could potentially lose money if you cash in your savings bond too early. If it hasn't matured yet, it still has time to earn interest for you. You'll also have to forfeit your last three months of interest earnings if you cash in your savings bond before five years.

But there are still good reasons to consider cashing in a savings bond, whether before the maturity date or not:

It has matured: After maturity, savings bonds no longer earn interest, so you should cash yours in right away to avoid losing value due to inflation.

For higher education: If you pay qualifying higher education expenses for yourself, your spouse, or a dependent, the interest will be exempt from federal income tax when you cash in your savings bond.

Pay off high-interest debt: You can save money by cashing in your bond and using it to pay off debt that's accruing higher interest charges than you're earning on the bond. This is likely the case if you have credit card debt.

Earn more interest: You can potentially earn more interest by depositing the funds into an account with a higher rate, such as a high-yield savings account or certificate of deposit (CD). Before moving the money, check to see what the rate is on your bond. For EE bonds, the figure can change after year 20; for I bonds, it changes every six months.

Disaster expense: If you live in an official disaster area, you can cash out your bond before the 12-month holding period.