KEY POINTS

>Series I bonds, an inflation-protected and nearly risk-free asset, will pay 6.89% through April 2023, the U.S. Department of the Treasury announced Tuesday.

>Based on the latest inflation data, it's the third-highest rate since I bonds were introduced in 1998.

>However, investors need to consider downsides, such as locking up the funds for one year, and the rate is likely to come down as the Federal Reserve combats inflation.

The U.S. Department of the Treasury on Tuesday announced Series I bonds will pay 6.89% annual interest through April 2023, down from the 9.62% yearly rate offered since May.