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Portfolio > Economy & Markets > Fixed Income

New Bill Would Raise I Bond Purchase Cap

By Dinah Wisenberg Brin

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What You Need to Know

  • The bill would raise the annual purchase limit to $30,000 from $15,000 when inflation tops 3.5%.

A bipartisan Senate bill introduced this week would raise the cap on annual Series I Savings Bond, or I bond, purchases, when inflation exceeds 3.5%, easing one of the limits on a government security designed to help protect investors and savers against rising consumer prices.

As inflation soared this year, market experts have suggested investors explore I bonds, which, if purchased through Oct. 31, carry a 9.6% interest rate for the first six months. The bonds generate interest by combining fixed and inflation rates; the interest rates change every six months.

Savers currently can purchase up to $15,000 in I bonds a year — a maximum $10,000 in electronic versions through the TreasuryDirect website and $5,000 in paper bonds through federal income tax returns.

Legislation introduced Tuesday by Sens. Deb Fischer, R-Neb., and Mark Warner, D-Va., the Savings Security Act of 2022, would raise the limit to $30,000 in purchases annually when the average six-month annual Consumer Price Index for all Urban Consumers exceeds 3.5%.

The new, raised purchase limit would apply only to families and individuals, not businesses and trusts, the senators said.

“The American people are scrambling for ways to protect their earnings from rampant inflation. I bonds are one option consumers should be able to leverage. Arbitrary purchasing caps on I bonds, however, are shortchanging the public from better utilizing the program,” Fischer said in a statement.

“We need to take an all-encompassing approach to help families facing high costs,” Warner said. “In tandem with our inflation-fighting efforts, and intervention from the Federal Reserve, this legislation would allow Americans to better shield their finances from the unpredictability of inflation and offer peace of mind during difficult economic times.” 

Earlier this year, Christine Benz, Morningstar’s director of personal finance, called I bonds “a straightforward way to obtain inflation protection,” adding, “The big negative is that purchase constraints limit their utility for larger investors.”

Dinah Wisenberg Brin

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