If you want safe, inflation-aware places for cash, three options come up most: I bonds, TIPS (Treasury Inflation-Protected Securities), and high-yield savings accounts (HYSA). They solve different problems.
Side by side
| Feature | I bonds | TIPS | High-yield savings |
|---|---|---|---|
| Inflation-linked | Yes (composite rate) | Yes (principal adjusts) | No |
| Current headline rate | 4.26% composite | Varies (real yield + CPI) | Varies by bank |
| Purchase limit | $10,000/yr per person | None | None |
| Liquidity | Locked 12 months | Tradable anytime | Fully liquid |
| Nominal loss possible? | No (0% floor) | Yes, if sold early | No |
| State/local tax | Exempt | Exempt (federal taxable) | Fully taxable |
| Best for | Set-and-forget inflation hedge | Larger/tradable allocation | Truly liquid cash |
How to choose
- Need it within a year? HYSA — I bonds can’t be cashed for 12 months.
- Want inflation protection on a modest amount and don’t mind locking it up? I bonds — and the 0.90% fixed rate is the best since 2007.
- Investing a larger sum or want to trade? TIPS, ideally in a tax-advantaged account to avoid phantom income.
Many savers use all three: HYSA for liquid cash, I bonds for the inflation-protected core up to the annual limit, and TIPS for anything above it. Model an I bond purchase with the value calculator. Not investment advice — verify rates with each provider and the Treasury.