Newly issued Series I Savings Bonds (aka iBonds and I-Bonds for "Inflation Protected Bonds") will pay 4.28% and Series EE Bonds will pay 3.00%. I-Bonds are a 100% safe way to defer taxes while getting inflation adjusted return for up to 30 years. These rates for new bonds are effective from November 2007 through April 2008.
More Information and links at "I Bonds Explained"
Earnings rates for I bonds and fixed rates for EE bonds are set each November 1 and May 1. Interest accrues monthly and compounds semiannually. Bonds held less than five years are subject to a three-month interest penalty. Both series have an interest-bearing life of 30 years; the EE bond fixed rate applies to a bond's 20-year original maturity.
I Bond Earnings Rate 4.28%, Fixed Rate 1.20%
The earnings rate for I-Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 4.28% earnings rate for I bonds bought from November 2007 through April 2008 will apply for their first six months after issue. The earnings rate combines a 1.20% fixed rate of return with the 3.06% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The fixed rate applies for the 30-year life of I bonds purchased during this six-month period. The CPI-U increased from 205.352 to 208.490 from March through September 2007, a six-month increase of 1.53%.
- More I-Bond Facts
- Graph: TIPS Core Yield + IBond Base Rates through 10/29/07 scroll down to click the pdf
Here is what older iBonds will pay, based on their base rate with the latest inflation adjustment
Base New 6-Month
Rate Rate
1.0%----4.08%
1.1%----4.18%
1.2%----4.28%
1.3%----4.38%
1.4%----4.48%
1.6%----4.68%
2.0%----5.09%
3.0%----6.11%
3.3%----6.41%
3.4%----6.51%
3.6%----6.72%
Ask questions at our iBond Discussion Forum at Facebook's "Investing for the long term" group.