New I bond fixed rate 0.3%; EE 1.2%

Monday, November 2nd, 2009
Categorized as: Yesterday's News (old post archive)

New Series I bond Savings Bonds will earn 3.36% for their first six months. The rate is made up of a new fixed rate of 0.30% and an inflation component of 3.06%. 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.

The spread between the I bond fixed base rate and the 10-year TIPS dropped to 111 percentage points, the lowest in two years and less than half the spread of a year ago. The 10-year TIPS rate on Friday was 1.41%.

The increased rate may be a sign that Obama Treasury appointees will be a bit friendlier to Savings Bond investors than the Treasury appointees at the end of the Bush administration were.

The rate on new EE bonds will be fixed at 1.20% for 20 years. It only makes sense to invest in these if you can hold them for 20 years, at which point their double-value guarantee will give you a rate of 3.50%.

To determine what your own I bonds will earn during their next six-month rate period, see the following table.


New Series I Savings Bond composite rates

Issue Date Fixed Rate Composite Rate
Sep 98 – Oct 98 3.40% 6.51%
Nov 98 – Apr 99 3.30% 6.41%
May 99 – Oct 99 3.30% 6.41%
Nov 99 – Apr 00 3.40% 6.51%
May 00 – Oct 00 3.60% 6.72%
Nov 00 – Apr 01 3.40% 6.51%
May 01 – Oct 01 3.00% 6.11%
Nov 01 – Apr 02 2.00% 5.09%
May 02 – Oct 02 2.00% 5.09%
Nov 02 – Apr 03 1.60% 4.68%
May 03 – Oct 03 1.10% 4.18%
Nov 03 – Apr 04 1.10% 4.18%
May 04 – Oct 04 1.00% 4.08%
Nov 04 – Apr 05 1.00% 4.08%
May 05 – Oct 05 1.20% 4.28%
Nov 05 – Apr 06 1.00% 4.08%
May 06 – Oct 06 1.40% 4.48%
Nov 06 – Apr 07 1.40% 4.48%
May 07 – Oct 07 1.30% 4.38%
Nov 07 – Apr 08 1.20% 4.28%
May 08 – Oct 08 0.00% 3.06%
Nov 08 – Apr 09 0.70% 3.77%
May 09 – Oct 09 0.10% 3.16%
Nov 09 – Apr 10 0.30% 3.36%

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:


On November 2nd, 2009 Nik said:

I suggest you update and append your October 15th chart to this post.

On November 2nd, 2009 Michael said:

Two things. First, you’ve got a typo for the current composite rate. It should be 3.36 instead of the 3.06 which reflects the inflation component only.

Second, what are your thoughts on buying I-Bonds right now. Clearly we all held off buying for the last six months and righly so, and clearly EE bonds are a poor choice, but what’s your thought on Ibonds right now?

On November 2nd, 2009 Buzz said:

Hi Tom:

With the new rate for I-Bonds at 3.6 would the following be a good strategy?

Cash in a 10/2003 bond now earning zero percent for the next five months and purchase a new I-bond at 3.6%? The 2003 bond has a fixed component of 1.1 versus the new bond fixed component of 0.3%. The tax liability is not a factor for me.

On November 2nd, 2009 John said:

I have a couple of bonds from the 0.0% fixed part of last year. Is the increase in the fixed rate enough to justify cashing in those bonds during the time when the three-month interest penalty would be zero? Thanks!

On November 2nd, 2009 Tom Adams said:

Nik and Michael – Thanks for the fixes and suggestions.

Michael – The new I bonds continue to be an excellent choice for the low-risk portion of your investment portfolio. I can’t predict the future, so I can’t tell you if they are the best choice.

Buzz – No, this is a bad idea. You’re giving up a 1.1% fixed rate for a .3% fixed rate. I misunderstood your question the first time I read this and gave you and John the same answer. Scroll down a bit to Mike B.’s comment, where he gives a much better answer to your question than I originally did.

John – Thanks for the idea – here are the details.

Tom Adams

On November 2nd, 2009 Diane said:


I thought that the composite rate for the period May 09 through October 09 was zero because the inflationary rate was negative. Am I mistaken on this?

On November 2nd, 2009 JJ said:

Unless I’m missing something, most of the above “composite rates” are mathematically off by a little, for if the composite rate is simply the fixed rate plus the current inflation component of 3.06%

On November 2nd, 2009 Bill Briner said:

Hi Tom,

Thanks for your website. I especially look forward to your updates in mid-April, the first of May, mid-October and the first of November. The current bonds appear to be a pretty good deal. If you buy them the last week in November and sell them November 1, 2010 (taking the 3-month penalty), the worst-case senario is that they will yield approximately 1.8% for a little over 11 months (1.9% equivalent state taxable return in Missouri when you take into account that no 6% Missouri state tax is due). This assumes a 0% inflation component in the second 6-month period. If the inflation component for the second 6-month period is 3.06% again, then the 11-month return would be about 2.7% (2.9% equivalent Missouri state taxable return). 1.9% is competitive with the current 1-year CD rates and 2.9% is much better than the 1-year CD rates.

On November 3rd, 2009 Mike B. said:


Did you really mean to answer “yes” to Buzz’s question? I wouldn’t sell a 10/2003 bond to buy a new one – you gain 3.36% for 5 months, but then you lose 0.8% (fixed rate difference) thereafter. So if you hold the bonds for a long time, you definitely lose – and if you don’t, then you have the 3-month penalty on the new bonds, which I think would just about cancel any possible gain.


On November 3rd, 2009 Tom Adams said:

Diane – you are correct. The chart on this page shows the rates for the six-month period after that one.

JJ – the actual formula for the composite rate isn’t just the fixed rate plus the composite rate. It also adds in a third number, which is the fixed rate times the composite rate. It’s there to adjust the fixed rate for inflation and makes the numbers look a bit too high.

Bill – agreed.

Mike B. – Yikes, you’re right! I misread Buzz’s question. I’m going back up to change that answer now.

Tom Adams

On November 6th, 2009 Walt said:

Tom, Please clear the air. The I bonds are at 3.36. This makes scents to purchase at this time. Why wouldn’t you move bonds that are at 0%? How long will you get the 3.36% ? If the rate changes back to 0% will your bonds in May 2010 get 3.36 or 0%? Thanks for your help.

On November 6th, 2009 Tom Adams said:

Walt – I bonds earn a combination of a fixed rate and the current inflation rate. Since they all earn the same inflation rate, which is recalculated every six months, the essential difference between one I bond and another is the fixed rate.

Because for the last six-month rate period the inflation rate was more negative than even the highest fixed rate, all I bonds earned 0% for six months.

It just doesn’t make sense to trade in an I bond for one that has a lower fixed rate. When comparing I bonds, do not look at the composite rate – it’s just for six months. Look at the fixed rate, which is forever.

Tom Adams

On November 6th, 2009 Michael Binder said:

Tom wrote: Look at the fixed rate, which is forever.

Not to quibble, but ‘forever’ is a lot longer than 30 years.

On November 20th, 2009 Jeff From Great Neck said:

Can entities (LLC’s) purchase paper bonds at the bank? If yes up to $5000? How do I fill out the form? Entity name no coowner or beneficiary?


On November 21st, 2009 Buzz said:

I just purchased an I-Bond from Treasury Direct. Subsequently I realized that there was no place or way to designate a co-owner. Did I miss something?

On November 23rd, 2009 Tom Adams said:

Jeff: It’s been several years since I’ve looked at this in detail, but when I did, I wrote it up in my book, which says that new paper Series EE bonds can be registered to entities like LLCs, but that paper Series I bonds can’t be. Since I bonds in Treasury Direct can now be registered to entities, this may have changed. Note that this applies to new bonds only. If you change the registration on an existing bond, the new registrant has to be an individual. As I understand the rules, you and the LLC could be co-owners, but the LLC would have to be listed first, as co-owners must also be individuals. An LLC can’t have a beneficiary since it can’t “die.” On the form, enter exactly what you want to appear on the bond itself. Hope this helps.

Buzz: Yes, you missed something. Details are here.

Tom Adams

On November 24th, 2009 Nikki said:

I got your book (Nov 2006) a few months ago when I remembered about my 48 $100 EEs in safekeeping (Mar96-Feb00) from my job. I never really thought more of them than just something I signed up for during a savings bond drive. Low interest rate, a million years to even equal what I paid, etc.

Since reading through your book, I’ve learned a lot and am now looking into I bonds. I’ve read the previous posts but I’m still having a difficult time determining when, if ever, is a good time to buy I bonds ($50 to $100 per month).

I’m trying to make safe investments – I can’t afford to lose a penny. I’m ready to pull my money from under the mattress, but don’t know quite where to put it. Besides a .15% checking and .40% savings accounts and a 1.15% cd (all VERY small amounts), I’m investmentless.
Any advice on Is for my situation would be greatly appreciated. Thanks.

On November 24th, 2009 Tom Adams said:

Nikki – A good time to buy I bonds is a little every month. You might be able to do this through your employer with a payroll savings plan. Otherwise, the easiest way to do is by opening a TreasuryDirect account. If you’re looking for something safe, I bonds are it.

Tom Adams

On December 1st, 2009 Sara said:

I purchased 2 I bonds in May 2009 but when I check on the savings bond site they haven’t earned any interest yet! Shouldn’t interest have begun on these bonds by now?

On December 2nd, 2009 Tom Adams said:

Sara – for the first six months, the rate on these bonds was zero, so you didn’t earn anything from May through October. You did earn 3.36% (annual rate) in November, but that’s not showing up because there’s a three-month interest penalty for redeeming a Savings Bond before five years. The penalty is already deducted from the redemption values shown in the calculators. So your Nov interest won’t show up until February.

Tom Adams

On December 5th, 2009 Jeff from Great Neck said:

Hi Tom,
I submitted paper I bond forms in the name of an LLC to Capital One Bank. The forms were rejected by treasury. Any advice or suggestions?

Jeff from Great Neck

On December 6th, 2009 sara said:

In February will I receive 3.16% or 3.36% for my November interest?

On December 7th, 2009 Jeannie Braun said:

On November 30, 2009, I went to Bank of America and purchased 3 I-Bonds (each at $10,000), 1 for my son and 2 for myself. I now have discovered that $10,000 I-Bonds are no longer available. I have the withdrawal receipt from my savings account at the local branch. I have not heard from Treasury Direct either. What do I do?

On December 7th, 2009 Tom Adams said:

Jeff – Can you obtain any information about why the forms were rejected? Let’s make sure it’s not some issue that has nothing to with I bonds and LLCs. But if that is the issue, then have you considered doing this with the new TreasuryDirect entity accounts.

Sara – I’m sorry, I misquoted the rate you’d get in my last message to you. Since May 2009 bonds have a fixed rate of 0.1%, you’ll get 3.16%, not 3.36%.

Jeannie – You’ll have to go back to your bank to get this straightened out. I’m surprised they haven’t already contacted you about this.

Tom Adams

On December 9th, 2009 Jeannie Braun said:

I just came back from Bank of America. They acted very surprised and told me they did not know that $5000.00 per SSN per year was the limit for paper bonds and $5000.00 for treasury direct. They also did not know that $10,000.00 I Bonds were no longer available. Now, they say, I will have to wait until the Treasury sends me a check for $30,000.00 and then I can bring in the check and purchase the max allowed This process they said will take 6 weeks or so to get money back. Now what?

On December 10th, 2009 Tom Adams said:

Jeannie – Although Bank of America is one of our too-big-to-fail banks, very few of its employees actually know anything about Savings Bonds – and that clearly includes the folks you’re dealing with.

You need to insist on speaking to someone who can help you. There is an office somewhere inside the vast reaches of BoA that knows about Savings Bonds and can help you. You need to get your local branch to contact that office or give you the contact information.

Tom Adams

On December 11th, 2009 Jeannie Braun said:

Yesterday, I went over to local branch of Bank of America and insisted on speaking with a supervisor about this mess. The supervisor finally understood what I was saying and after about 20 minutes of explaining to him the situation he realized a “horrible mistake” had been made. This morning, he contacted me, I went over to bank with my paperwork in hand and he produced the cashier’s check that his bank made out to the Treasury Dept. for $30,000.00 and a clear form letter that they would be returning the paperwork to me as they could not sell me the I bonds in this amount. He placed the money back into my savings account, and then I explained to him I wanted to purchase (2) $5,000.00 I Bonds one for my son and 1 for myself for this year. He said the funds ($30,000) would not be available until tomorrow. I do not know why, it was their cashiers check that they made out to Treasury from monies in my savings account. I was instructed to return tomorrow morning and place the orders.
Thanks for your help.

On December 14th, 2009 Tom Adams said:

Jeannie – It doesn’t surprise me that a bank would want to make sure a BoA cashier’s check cleared, but it’s a sign of the times that it’s BoA itself that wants to make sure it really has the money.

I believe any reasonable person listening to your story would be concerned that this is not the kind of place you’d want to keep your money.

Tom Adams

On December 29th, 2009 Walt said:

Tom, Good morning. What is the max you can purchase per year? 5,000 of I bonds and 5,000 EE bonds for 10,000 total? Please explain. Thanks.

On December 29th, 2009 A. C. said:

FYI, If you add a beneficiary you must use there full name, at first I used the first initial, and full last name for my beneficiary when I bought mine in paper at Capital One. They did not know or catch the error until after they sent it off and had them returned. I had to go redo the papers and that pushed me into the next month, still get the same fixed rate but did not benefit from buying at the end of the month, Finally got the bonds after having the money out of my account for almost a month.

Looking at the bonds it looks like they still messed them up, My “beneficiary” is listed as an “OR” so the bonds read “My full name” “My Address” then at the bottom it says “OR Beneficiary name” which does not look right to me. Any tips on what to do?

On December 30th, 2009 Tom Adams said:

Walt – The info you’re looking for is here.

A.C. – The format is correct, but OR makes the second named person a co-owner, not a beneficiary. A beneficiary can’t cash the bond until after you die, a co-owner can cash the bond at any time. If you want POD rather than OR, your bank has a form for Savings Bonds issued in error they can use to fix this.

Tom Adams

Comments Closed

June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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