Everyone quotes 4.26%. You keep that rate for six months.

TreasuryDirect publishes the arithmetic. Composite rate equals the fixed rate, plus twice the semiannual inflation rate, plus the two multiplied together. Today that is 0.0090, plus 2 times 0.0167, plus 0.0090 times 0.0167. It comes to 4.2550%, which Treasury rounds to 4.26%.

The 1.67% in there is six months of non-seasonally-adjusted CPI-U, roughly 3.34% annualized. It gets replaced every May 1 and November 1. And on a bond you already own it rolls over on the six-month anniversaries of your issue month, not on Treasury's announcement day, so a bond bought this month reprices every April and October for the next thirty years.

The 0.90% never moves. Which means that over a long hold the inflation half is just tracking prices and washing out, and the fixed rate is your entire real return. An I bond bought today is a promise of inflation plus 0.90%, and nothing else.

Here is the fixed rate at each reset since late 2023: 1.30% in November 2023, 1.30% in May 2024, 1.20% in November 2024, 1.10% in May 2025, 0.90% in November 2025, 0.90% in May 2026. Five resets, three cuts, no increases.

Now the headline over the same stretch: 4.66%, 4.66%, 4.56%, 4.46%, 4.26%, 4.26%. Both numbers fell by exactly 0.40 points. On the composite that is a 9% haircut. On the fixed rate it is 31%, because it was starting from 1.30 instead of 4.66. The part of the bond you keep got a third cheaper while the part you rent barely budged, and only one of those was ever in the headline.

Treasury announces the fixed rate every May 1 and November 1 and publishes no formula for how it picks the level. The inflation half you could nearly work out yourself once the September CPI landed on October 14. The fixed half is somebody's decision. So "wait, November 1 might be better" is a bet, not a plan, and the last five resets ran the other way.

Treasury's real yield curve for October 20 reads 2.55% at five years, 2.77% at ten, 3.02% at twenty and 3.16% at thirty. Those are TIPS yields, already net of inflation. An I bond's fixed rate is the same species of number: 0.90% on top of inflation. Same issuer, same inflation adjustment, 1.87 points apart.

Put $10,000 of purchasing power against each for ten years. At 0.90% real it comes back as about $10,940 in today's money. At 2.77% real it comes back as about $13,142. Call it $2,200 of real difference on the same ten thousand dollars, from the same Treasury, over the same decade.

The gap buys you three real things, so be fair about it. An I bond's composite rate cannot go below zero even in severe deflation, while a TIPS principal can be adjusted down. An I bond has no market price at all, so there is no bad moment to sell into, whereas a TIPS you sell before maturity goes at whatever the market pays that day. And on an I bond you can defer every dollar of federal tax until you cash it out, while a TIPS owes federal tax on its interest every year, with principal changes in the mix too. One thing is not a difference: both are exempt from state and local income tax, so ignore anyone who sells you an I bond on that. Those three advantages are worth paying for. They are not worth nearly two percentage points of real yield a year, which on a ten-year hold is the $2,200 above.

If the money might be needed soon, stop here. You cannot cash an I bond at all for twelve months, and cashing before year five forfeits the last three months of interest. Rate aside, a twelve-month lock disqualifies it as emergency cash, and no composite number fixes that.

If you are holding for a decade or more, the fixed rate is close to the whole story, and 0.90% is weak against both its own recent history and a TIPS curve sitting near 3%. Also notice how small the stakes are: the limit is $10,000 per Social Security Number per calendar year, with a $25 minimum. Whatever you decide about October 31 is at most a $10,000 decision. And because the cap runs by calendar year, buying in late December and again in early January gets you $20,000 inside a couple of weeks, which is a far bigger lever than the reset date.

So do not buy out of deadline urgency on October 30. There is no penalty for seeing the November 1 number first, and if it comes in higher you will have wanted to wait. If what you actually want is guaranteed purchasing power you can sit on, price a TIPS before you price an I bond. It is paying more than three times the real yield and nobody writes countdown articles about it.