Treasury Says Orders for I Bonds With 9.62% Rate Might Not Be Completed by Deadline

Safe, staid inflation-adjusted Series I savings bonds don’t capture much of the investing spotlight in most years. They became breakout stars of 2022 as inflation reached a four-decade high, markets plunged, and investors searched for a safe place to park their money.

During just the final week of October, the Treasury issued $1.95 billion in I Bonds, more than the total for fiscal year 2021. In just one year, some 3.7 million new accounts were created on the site, more than the 2.4 million for the prior 10 years combined.

“The popularity of I Bonds shows how people want to throw whatever they can at a problem like inflation,” said Kelly Klingaman, a financial planner in Austin.

The interest rate on I Bonds is recalculated every six months. The I Bond interest rate is based on a calculation tied to the consumer-price index. The overall CPI increased 8.2% in September from the same month a year ago, according to the Bureau of Labor Statistics. There is a $10,000 annual limit per person for I Bonds, yet there are certain strategies to exceed that ceiling.

Investors must complete purchases and receive a confirmation email by Oct. 28 to ensure they will get the 9.62% rate, according to the TreasuryDirect website. 

The Treasury doubled its server capacity in an effort to address the outages, a Treasury Department spokesman said. The system experienced some moments of slow performance and was briefly unavailable, the spokesman said.

People continue to have difficulty accessing and logging on to the site.

“Due to unprecedented  requests for new accounts, we can’t guarantee customers will be able to complete a purchase at the current 9.62% rate by the Oct. 28 deadline. The TreasuryDirect system has been, and continues to, process the payments that have been completed,” a spokesman said.

If a customer receives a confirmation that their purchase has been made or completed then the payment will be processed, a spokesman said.

This isn’t the first time the website crashed due to high I Bond demand. The TreasuryDirect website experienced outages on May 3, a day after the 9.62% rate was announced.

Users regularly take to social media to complain about the TreasuryDirect website and sometimes go to great lengths to make their I Bond purchases.

“The TreasuryDirect website isn’t known for its user friendliness,” said Elliot Pepper, a financial planner in Baltimore. 

Tuesday night Mr. Pepper was working with a client to open custodial accounts and purchase more I Bonds before the rate change and twice they were knocked off the website for seemingly no reason, he said. Eventually they were able to open the accounts and buy I Bonds, but it was quite stressful at the time, he said. 

Still, as long as people are comfortable with the 12-month lock up period, I Bonds are a great place to invest excess cash right now, he said.

During the time that the I Bond is held, there are no federal taxes due. Though investors get the benefit of compounding interest every six months, they don’t pay any federal taxes until they actually cash out the bonds.

Additionally, there are no state or local taxes on the interest earned, which is a big benefit for investors in high-tax states, said Mr. Pepper.

More than $22.3 billion worth of I Bonds have been purchased this year through September on the Treasury Department’s website. 

Bipartisan legislation introduced in the Senate in September would raise the cap on purchases to $30,000 per person when CPI holds above 3.5% year-over-year for a period of six months or more. 

The yield for I Bonds far exceeds cash, and the bonds are appealing for investors who want to grab a higher rate of return without the risk of the stock market.  

—Richard Rubin contributed to this article

Write to Veronica Dagher at Veronica.Dagher@wsj.com