The interest rate for saving bond in the next six months has just been annouced. EE bonds, whose interest rate is tied to 90% of the average 5-year Treasury securities in the last six months, now posts an interest rate of 3.25%, compared to 2.84% in the previous six months. Inflation-protected I bonds now yields 3.67%, which includes a 1.0% fixed rate component for I bonds acquired in the next six months, and a 2.66% inflation component that applies to all I bonds issued. The rate of 3.67% is also increased from 3.39% in the last six-month period.
As you all know, I have been stashing some "pocket money" every month to saving bonds every month since last November. By the end of October, I have around $3,000 in my TreasuryDirect account, including $600 in EE bonds and $2,400 in I bonds. My current plan is to add $500 to saving bonds every month with a preference of I bonds. (I prefer I bonds a bit as it enjoys higher interest and the trend is likely to continue in the next 12-24 months. THis period's EE bond interest rate is helped by a market interest rate spike during the summer -- at today's 5-year Treasury rate of 3.34%, the new EE bond interest rate would be close to 3.00%.)
I see saving bonds as a convenience way of building some emergency cash over time. Although saving bonds cannot be redeemed in the first 12 months, over time it enjoys better interest rate than almost all money market account, and owners may receive certain tax benefits on interest when proceeds are used for educational purposes.