The last time I checked what my bank deposits to my savings account, it was 0.05% per year. That’s not 5%, it’s not even five tenths of a percent. It’s 5 hundredths!

We all know we’re in a low interest rate environment. This is great for borrowers, but terrible for savers. There are now strong indications of the reality of inflation, yet there my savings interest rate remains at 0.05%.

As the US government starts to raise interest rates in response this will likely increase your savings interest rate as well, but there are some hard realities we need to face with this, the biggest of which is inflation. It has been soaring, and is unlikely to be “transitory” as previously thought.

So what is a saver to do? What do you do with cash savings that is literally losing value every month due to the effects of inflation, but that you need to keep safe and relatively liquid? Let me introduce you to at least one gift the US Treasury is handing you: I bonds.

Most bonds are issued with a fixed interest rate which is the rate you receive until the bond matures. I bonds are different. Their interest rate has two different components: a fixed rate plus an inflation adjusted rate. The whole idea is for the bonds to help individuals like you and me keep some of our savings on pace with inflation. Since these bonds are issued by the US Treasury, they’re backed by the full faith and credit of the US government, so they’re “guaranteed” in that sense and carry much less risk and volatility than the stock market.

In September/October of this year, I bonds were paying 3.5% per year. That’s an interest rate 70 times higher than my bank savings account. The rate on I bonds adjusts every 6 months, so in November the rate adjusted, taking into account the surge in consumer inflation the economy experienced in October. I bonds are now paying a whopping 7.12% per year! This rate will continue to adjust upward or downward at 6-month intervals, again, all dependent on what inflation is doing.

The interest earned on your I bonds accumulates in your US Treasury account, so another advantage is the interest is tax-deferred, meaning you don’t pay taxes on the interest earned until you’ve redeemed your bond.

There are some important restrictions to understand with I bonds. You can only purchase up to $10,000 of I bonds per individual per year. You can purchase another $10,000 for a trust, a corporation, or as a gift to a minor as well.

The only way to purchase these bonds is directly through the US Treasury’s website at treasurydirect.gov, and you must be comfortable linking your checking or savings account online to do it; there’s no way to mail a check for your bond purchase. I bonds must also be purchased for a minimum of one year, so don’t expect to be able to move your money in and out like a checking or savings account.

In summary, I bonds are a “saving grace” for savers with idle cash being eaten away by the corrosive effects of inflation. There are some restrictions to these bonds, but in my view the pros significantly outweigh the cons.