By Sabrina Karl

Inflation is still running high, meaning cash you’re holding in savings accounts, money markets, and certificates of deposit likely isn’t holding its value. There is, however, a savings vehicle that can protect your spending power against inflation, and it’s called the I bond.

Issued by the U.S. government and therefore almost risk-free, I bonds are currently paying a whopping 9.62% APY. No, that’s not a typo. In fact, it’s the highest rate ever offered on I bonds.

But while that rate is attractive, I bonds involve certain limitations. For instance, the rate will change every six months, meaning it’s unknown how the rate will move in the future. Your only guarantee is that it will never move below 0%.

Another restriction is that you cannot withdraw your funds for the first 12 months. After one year passes but before you’ve held the bond five years, you can withdraw with a penalty of the last three months’ interest. After five years, there is no longer a penalty.

The interest you earn on I bonds is added to your principal every six months, and while it is federally taxable, it is exempt from state and local taxes. How you choose to report it on your taxes is up to you—you can report each year’s interest, or you can wait until you cash out the bond and report the interest all at once.

I bonds also have an investment restriction. An individual can buy up to $10,000 in a year, with an additional $5,000 possible if buying the bonds with your tax refund.

Given the unprecedented rate, I bonds could be an excellent place to move some of your emergency cash or even funds you’re holding in a taxable investment account. Just be sure it’s money you can live without for a year.