# Savings Bond rate vs yield

##### Tuesday, March 29th, 2005

##### Categorized as: Savings Bond interest rates

*The Savings Bond Wizard shows that for an EE bond issued 09/1992, the rate is 4.00% and the yield is 5.92%. For an I bond issued 01/2003 the rate is 4.28% and the yield is 3.51%. I don’t understand why rate and yield are different. How they are computed? Why is the I bond yield less than rate and EE bond yield more than the rate?
*

**Tom’s response**

First you have to realize that the interest rates paid by Savings Bonds can change every six months.

The **rate** shown by the Wizard is what a bond is earning in its current six-month rate period.

The **yield** is how much it’s earned, expressed as an annual interest rate, since the day you bought it.

If interest rates go down over the life of a bond, as they have for your ’92 EE bond, the lifetime yield will be higher than the current rate.

If interest rates go up over the life of a bond, as they have for your ’03 I bond, the current rate will be higher than the lifetime yield.

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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Tom Adams