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New Savings Bond Rate: I = 2.41%, EE = 3.70%

Contributed by mm | May 1, 2006 7:58 PM PST





Is it Treasury's intent to kill the Savings Bond program by setting the new I-series and EE-series yield at 2.41% and 3.70% respectively? Now that dozens of online banks are offering juicy returns at 4.00% or above, why will people want to invest in savings bonds?

From Savings Bond Advisor:

The Treasury will raise the fixed interest rates it will pay on Savings Bonds issued during the next six months, it announced this morning.

For Series I Savings Bonds, the fixed base-rate will be 1.40%, up from the previous 1.00%. For Series EE Savings Bonds, the fixed rate will be 3.70%, up from the previous 3.20%.

During their first six-month rate period, I bonds issued beginning today will have a composite rate of 2.41%. The inflation component, which changes every six months for all I bonds, will be 1.00% for the next six-month rate period.
This post has 2 comments. Read and share your opinions.

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Comments
>>> Louis Duran Commented on May 1, 2006

I personally am planning on moving about half my money in i-bonds out and into maybe the Dodge & Cox International Fund. Even though there is a tax advantage to I-bonds the low rate is easily overcome by better performing bonds. Who knows? Maybe in 6 months time they rates will be back up to a more normal 5-7% range. I wonder if the CPI books were cooked to get a low yield on these bonds??? Is that even possible?


>>> john Commented on May 2, 2006

It's a quirk of the method of how they calculated the rates. High first half and low now. The average is over 4.5 for the year. Not too shabby.



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