I bond fixed rates again at zero; EE 0.60%

Monday, November 1st, 2010
Categorized as: Savings Bond news

New Series I bond Savings Bonds will earn 0.74% for their first six months. The rate is made up of a new fixed rate of zero and an inflation component of 0.74%. The fixed rate is good for the life of the bond; the inflation component is adjusted every six months based on changes in the Consumer Price Index.

Even with the I bond fixed rate at zero, the spread between the I bond fixed base rate and the 10-year TIPS dropped to 50 percentage points, the second lowest spread ever and the lowest in five years. The 10-year TIPS rate on Friday was 0.50%.

The rate on new EE bonds will be fixed at 0.60% for 20 years. 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.

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.

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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:

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June 1, 2010

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