No one has yet mentioned the tax-advantaged aspect. Interest income from I-bonds is exempt from state income tax, and federal tax can be deferred until you cas

No one has yet mentioned the tax-advantaged aspect. Interest income from I-bonds is exempt from state income tax, and federal tax can be deferred until you cash them in or 30 years, whichever comes first. Paying tax on the interest when you are in a lower tax bracket later in life makes a lot of sense. The income can also be tax-free if used for qualified educational expenses for you or some family members (not going into the details here). It seems to me the only competition here is bank CD (certificate of deposit) for 1 to 5 year term, which also has an early withdrawal penalty but is not tax advantaged in any way, and even now, you'd be hard pressed to get more than 2-3% interest on CDs from most banks, and that rate usually does not adjust at all during the life of the CD. As some have mentioned, this is also a pretty good place to keep emergency funds, once you get past the one year lockup.