New I bond fixed rate 0.70%; EE 1.30%

Monday, November 3rd, 2008
Categorized as: Yesterday's News (old post archive)

New Series I bond Savings Bonds will earn 5.64% for six months, which is the highest rate the U.S. Treasury currently offers on any of its many securities. The rate is made up of a new fixed rate of 0.70% and an inflation component of 4.92%. 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 widened to 2.44 percentage points, the widest spread ever by far. Prior to this the widest spread was May 2008’s 1.50 percentage points. The 10-year TIPS rate on Friday was 3,14%.

The 1.30% rate on new EE bonds shows the Treasury is still fine with taking advantage of EE bond investors.. It’s not only the lowest EE rate ever offered, it’s below Friday’s 1.34% Treasury rate for 1 year securities.

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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 4th, 2008 Gordon said:

Do you think I-Bond is good to buy now?

On November 4th, 2008 Tom Adams said:

Gordon – if you are investing the same amount of money every month, now is the time to switch from putting it into Savings Bonds to putting it into something like an S&P 500 Index Fund. Buy stocks when they are cheap.

I’m not saying the stock market doesn’t have further to fall – it’s just that monthly investors will get a better long-term return by buying stock when stocks are cheap and buying I bonds when stocks are expensive.

Note carefully that I’m not recommending moving money out of I bonds you already have into stocks and I’m not recommending a one-time move from cash into stocks. My advice is for people making regular monthly investments.

If you’re asking about moving a large amount of money on a one-time basis into I bonds, the $5,000 annual investment limit has a tight throttle on that strategy.

Tom Adams

On November 4th, 2008 Vince said:

My payroll deduction for bonds does not seem to keep track of the $5,000 limit on savings bonds both EE and I. What happens if you go over a few dollars in a given year? Also what are my $ limits for purchase if I include my wife as a Co-Owner?

On November 4th, 2008 Tom Adams said:

Hi Vince – including your wife as co-owner doesn’t change the limit; the limit goes by the Social Security Number on the bond. So she’d have to get bonds with her own SSN to get you “two limits” worth of bonds.

There’s no penalty for going over the limit but the Treasury has the right to send you back your money without interest. I haven’t heard of that actually happening, however.

Tom Adams

On November 8th, 2008 Shane said:


When I joined the Army I started to get EE bonds. I stopped this last year but now my oldest 6 bonds are earing 2.74%. They will not mature so I wont make much money off of them. I was digging around TD and saw that I could sell my EE bonds for a $45 fee each.

I thought about taking that money from the bonds and sticking in a 5 year 5% APY CD. I wont do stocks as I dont know much and I just starting playing the game.

Can this be done? Would it be worth if for me to do this?


On November 10th, 2008 Tom Adams said:

Hi Shane – the $45 fee doesn’t apply to Savings Bonds. If they are over a year old you can cash them without a fee – more info here.

Tom Adams

On November 18th, 2008 Jack said:


I own both paper bonds, as well as electronic bonds in a Treasury Direct account. All bonds are titled jointly with my wife. Last year I bought $5000.00 worth of electronic bonds and $5000.00 worth of paper bonds. If I have the money available this year, I was considering buying $5,000.00 in paper bonds and $5,000.00 electronic in each of our names individually, with a POD to the other (for a grand total of $20,000). I know it should not be a big deal ordering the paper bonds individually, but I am wondering if I will have to open an other Treasury Direct account(s) because I would be changing the titling from Joint to individual?

Thanks for your assistance.


On November 19th, 2008 Tom Adams said:

Hi Jack – Your wife will need a TD account in her name and Social Security Number for the electronic bonds that go in her name with you as POD.

The owner has to be the same on all the bonds in a TD account (disregarding bonds in the “gift box”), but not anything else about the registrations has to be the same. You can hold multiple registration types in one TD account with multiple second names (or no second name).

Tom Adams

On December 4th, 2008 Ed said:

The current I-Bond rate seems attractive for a Short-Term (1 year) gamble.

If a person purchased $5k (electronic) + $5K (paper) = $10K in December 2008 AND did the same in January 2009 …. all at 5.64 % …. that’s 6 months return on the total $20K.

OK, what about the final 6 months ?

The new May 2009 rate could be as low as roughly 3 % and that still makes the I-bonds more sensible that a 1 year bank CD at 4 %.
Sure, you lose the last 3 months of interest, then again the earnings are state income tax free.

Question: Eventhough Savings Bonds are for Long Term investing, …. how about a Short Term “Grab” ?

On December 8th, 2008 Tom Adams said:

Hi Ed – the risk here is the rate for the second six months could be zero, given the way the CPI is falling. Of course there’s good news there, too – the interest penalty would be zero.

Tom Adams

On December 10th, 2008 greg said:

Are saving bond as safe as treasury notes with respect to return of money? Thanks

On December 11th, 2008 Tom Adams said:

Greg – Savings Bonds and Treasury Notes are both issued by the US Treasury. In terms of return of money they are equivalent in a legal sense.

From the point of view of a politician, consider that Savings Bonds are primarily held by US citizens and Treasury Notes are primarily held by foreign central banks. If you had to default on one or the other, which would you choose? Hint – which holder can vote you out of office?

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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