I bond fixed-rate zero; new EE-bonds to earn 0.20%
Wednesday, May 1st, 2013
Categorized as: Savings Bond FAQ
The Treasury announced today that I bonds issued from today through the end of September 2013 will have a fixed-rate of zero. This is the sixth Savings Bond rate announcement in a row setting the I bond fixed rate at zero.
The I-bond inflation component for bonds entering new rate periods during the next six months will be 1.81%.
Normally the Treasury tries to keep about a 1 percentage point difference between the fixed rates for I bonds and 10-year Treasury Inflation Protected Securities (TIPS). However, yesterday the fixed-rate on 10-year TIPS was -0.64%. Thus the spread today is -64 basis points, the second-lowest spread on record. (One percentage point is 100 basis points.)
The rate on new EE bonds will be fixed at 0.20% for 20 years. This matches the record low rate for fixed-rate EE bonds. If you can invest in these and hold them for 20 years, at which point their double-value guarantee will give you a rate of 3.50%, they are one of the best Treasury investments currently available (yesterday the rate on 20-year Treasury Bonds was 2.49%).
Keep in mind that the new interest rate for your I bonds will not necessarily begin in November. Instead, new rate periods begin every six months starting with the month in which your I bond was issued. So, for example, an I bond issued in July begins new rate periods in July and January.