I Bond Facts
I Bonds Explained Best CD Rates

We moved to I Bond Rates (for current rates)
I Bonds are a low-risk, liquid savings product. While you own them they earn interest and protect you from inflation. You may purchase I Bonds at www.TreasuryDirect.gov and at most local financial institutions.

11/8/08 Update:  Newly issued series I bonds will pay 5.64% and Series EE Bonds will pay 1.30%. iBonds (Inflation Protected Bonds) are a 100% safe way to defer taxes while getting inflation adjusted return for up to 30 years. These rates for new bonds are effective from November 2008 through April 30,  2009.

Earnings rates for I bonds and fixed rates for EE bonds are set each November 1 and May 1. Interest accrues monthly and compounds semiannually. Bonds held less than five years are subject to a three-month interest penalty. Both series have an interest-bearing life of 30 years; the EE bond fixed rate applies to a bond's 20-year original maturity.

I Bond Earnings Rate 5.64% with a Fixed Rate of 0.70%

The earnings rate for I-Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 5.64% earnings rate for I bonds bought from November 2008 through April 30, 2009 will apply for their first six months after issue. The earnings rate combines a 0.70% fixed rate of return with the an adjustment for the annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The fixed rate applies for the 30-year life of I bonds purchased during this six-month period.

Inflation Bond Facts:

Best Time to Buy I Bonds
:  Near the end of the month.  Make sure you leave enough time for funds to clear.

Best Time to Sell I Bonds:  At the start of the month since interest for the prior month is computed on the first of each month.  You don't earn interest for fractional months so sell only after the new interest shows up in your account, usually the first of the month,

I Bond Composite rate = [Fixed rate + (2 x Inflation rate) + (Fixed rate x Inflation rate)]

Base  New 6-Month
Rate      Rate

We moved to I Bond Rates

More Inflation Bond Facts:
  • I Bonds earn interest from the first day of their issue month.
  • You can redeem them at any time after a twelve-month minimum holding period
  • They are an accrual-type security
  • They increase in value monthly and the interest is paid when you redeem the bond
  • I Bonds are sold at face value; i.e., you pay $50 for a $50 I Bond
  • I Bonds grow in value with inflation-indexed earnings for up to 30 years
  • If you redeem I Bonds before they’re five years old, you’ll forfeit the three most recent months’ interest; at or after 5-years old, you won’t be penalized.

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