The new U.S. Savings Bond interest rates effective May 2017 through October 2017, apply to NEW savings bond purchases only.
Series EE Savings Bonds purchased from May through October, 2017 will earn a dismal 0.10% for the next 20 years. That rate remained unchanged from the prior 6 month period.
The Series I Savings Bond rate dropped, now earning a meager 1.96% (down 0.80% from the prior 6 months) Unfortunately, the fixed rate portion of the I Bond will remain at zero percent. The variable rate is currently set at 1.96%. Depending on financial market conditions, the variable rate may change after November 1, 2017.
Those owning older savings bonds shouldn’t panic. These new rates are not likely the rates that their bonds are earning. Keep in mind a June 2000 Series I bond is currently earning over 6%.
Confused? Use an online bond calculator to quickly determine the interest rate for every (paper) savings bond you own.
Savings bond interest rates are determined based on when a bond was purchased and the series (ex: EE or I). Various interest rates, formulae, rules and regulations have been implemented since savings bonds were issued in 1935.
Those holding older bonds should keep in mind, the rates announced every 6 months are combined with all the prior years interest rates to create the new overall yield.
Savings Bonds do not all perform the same.
Series EE Bonds purchased May 2005, and after, earn a fixed rate of interest for the first 20 years. The rates are currently based on 10-year Treasury note yields. It is also adjusted for features unique to savings bonds, such as the tax deferral feature and redemption option.
Series I Bonds are composed of a fixed rate – which remains the same for the life of the bond – along with an inflation rate. The government sets the inflation rate every six months (May and November), based on changes in the adjusted Consumer Price Index for all Urban Consumers (CPI-U).
Even in times of deflation, bonds may not earn any interest for a specific period, but they will never actually lose money. Savings bonds are guaranteed and backed by the full faith and credit of the government.
To receive monthly e-bond statements that will help eliminate stress and any interest rate performance guesswork, consider using a bond management service .
The good news is that interest rates are starting to rise. Interest rates for savings bonds will likely follow. Always check your interest rates before cashing in any bond !
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