Explaining what happened to I bonds
Wednesday, May 10th, 2006
Categorized as: Yesterday's News (old post archive)
In his Sunday May 7 column, Anomaly Explains Puzzling Interest Rates for Series I Savings Bonds, Washington Post writer Albert Crenshaw does a nice job of explaining what just happened to Series I bond rates.
And in yesterday’s Even with rate changes, savings bonds still steady, Sacramento Bee writer Jack Sirard takes his swing at it.
What’s missing from Sirard’s story, but not from Crenshaw’s, is the concept that I bonds pay a wide variety of different rates depending on when they were issued. Reading Sirard’s story, you’d think all I bonds were suddenly paying 2.41%, when in fact some will pay as much as 4.62% during their next six-month rate period (and some as little as 2.01%).
Stories about Series I Savings Bonds should emphasize that what’s important to I bond investors is the fixed-base rate, not the composite rate.
And the fixed base rate just went up. As Dan Pederson, author of Savings Bonds: When to Hold Them and When to Fold Them, and Everything In-Between, says in Sirard’s story, that’s good news.
Although her story was written before the recent rate announcement, Sandra Block of USA Today actually included a table of I bond base rates in her article on April 28, I Bonds’ interest rate will get that sinking feeling May 1st. That’s impressive.
I have a similar table of I bond fixed rates here, but otherwise this information is hard to find.