I bond fixed rate held at 1.40%; EE 3.60%

Wednesday, November 1st, 2006
Categorized as: Yesterday's News (old post archive)

The Treasury will hold the fixed interest rates it will pay on Series I Savings Bonds issued during the next six months steady at 1.4%, it announced this morning.

For Series EE Savings Bonds, the fixed rate will be 3.60%, down from the previous 3.70%.

During their first six-month rate period, I bonds issued beginning today will have a composite rate of 4.52%. The inflation component, which changes every six months for all I bonds, will be 3.10% for the next six-month rate period.

In their next six-month rate period, older I bonds will pay a variety of rates, depending on issue date, ranging from a low of 4.12% for I bonds with the lowest fixed base-rate of 1.00% to a high of 6.76% for I bonds with the highest fixed base-rate of 3.60%.

The new Series EE bond rate, which is set “administratively” but is based on the average rate for 10-year Treasury securities, now lags even further behind the rates set for EE bonds issued from May 1997 through April 2005. The rate for those bonds is set by formula – 90% of the average 5-year Treasury rate. They will pay 4.39% during their next six-month rate period, up from 4.11% previously.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:


On November 1st, 2006 Dan said:

Ah, I knew I should have waited one more day for that purchase! Oh well, worse things have happened than 2.41% for the next 5 months I guess…

On November 1st, 2006 John said:


I was new to I bonds about this time last year and bought about $500 or so during the 6.73% composite (with 1.0% fixed rate). Is it worth going to the trouble as these bonds turn one year old of cashing in and reinvesting at the higher rate?

On November 1st, 2006 Dan said:


Basically, you’re getting 0.4% additional interest in exchange for (1) an extra year of being subject to the five-year early withdrawl penalty and (2) a sacrifice of three months of interest at the most recent lowly 2.01% rate. That tradeoff will pay off for you more the longer you hold the I-bonds.

The sacrifice to upgrade your I-bond is so small that, unless you know you’re going to need to redeem the money within a year or so, I’d suggest you make the exchange.

On December 13th, 2006 Monica said:

I want to buy bonds today to save for my son’s college expenses, but don’t know which kind to purchase. Any advice? He is 11 years old. Thanks!

On December 14th, 2006 Tom Adams said:

Monica – the only choice is between EE and I bonds. Historically I bonds have outperformed EE bonds.

You need to get the registration correct if you want to use these for your son’s college expenses. I recommend you read my page on the savings bond college education deduction.

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June 1, 2010

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