Next I bond inflation component 2.21%

Friday, April 13th, 2012
Categorized as: Yesterday's News (old post archive)

The next I bond inflation component will be 2.21%, down from the current 3.06%, but much higher than what was expected based on inflation in the first five months of the six-month rating period (0.75%). The component is based on the difference between the Consumer Price Index in September (226.889) and March (229.382). The March CPI was released this morning.

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% 5.65%
Nov 98 – Apr 99 3.30% 5.55%
May 99 – Oct 99 3.30% 5.55%
Nov 99 – Apr 00 3.40% 5.65%
May 00 – Oct 00 3.60% 5.85%
Nov 00 – Apr 01 3.40% 5.65%
May 01 – Oct 01 3.00% 5.24%
Nov 01 – Apr 02 2.00% 4.23%
May 02 – Oct 02 2.00% 4.23%
Nov 02 – Apr 03 1.60% 3.83%
May 03 – Oct 03 1.10% 3.32%
Nov 03 – Apr 04 1.10% 3.32%
May 04 – Oct 04 1.00% 3.22%
Nov 04 – Apr 05 1.00% 3.22%
May 05 – Oct 05 1.20% 3.42%
Nov 05 – Apr 06 1.00% 3.22%
May 06 – Oct 06 1.40% 3.63%
Nov 06 – Apr 07 1.40% 3.63%
May 07 – Oct 07 1.30% 3.52%
Nov 07 – Apr 08 1.20% 3.42%
May 08 – Oct 08 0.00% 2.21%
Nov 08 – Apr 09 0.70% 2.92%
May 09 – Oct 09 0.10% 2.31%
Nov 09 – Apr 10 0.30% 2.51%
May 10 – Oct 10 0.20% 2.41%
Nov 10 – Apr 11 0.00% 2.21%
May 11 – Oct 11 0.00% 2.21%
Nov 11 – Apr 12 0.00% 2.21%

Keep in mind that the new interest rate for your I bonds will not necessarily begin on May 1. 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.

Because the Treasury doesn’t have public criteria for setting the fixed base-rate for new I bonds, it’s usually impossible to predict what the next I bond fixed-base rate will be. However, yesterday the 10-year TIPS rate was -0.22%. And you can be sure that if the 10-year TIPS rate is negative, the fixed rate for new I bonds will be zero.

Given that the current fixed base rate also zero, I bonds you purchase today will earn 3.06% for six months, followed by six months of 2.21%. If you wait until May 1 to invest, you’ll get 2.11% for six months, followed by six months of an inflation rate yet to be determined.

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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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