Treasury raises I Bond fixed rate to 0.1%

The US Treasury just announced that it is raising the the fixed rate on Series I Savings Bonds to 01.%, up from 0.0%. This creates a composite rate of 1.64% for I Bonds purchased from today through April 30, 2016. Here is the announcement:

The composite rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the 30-year life of the bond, and the semiannual inflation rate. The 1.64% composite rate for I bonds bought from November 2015 through April 2016 applies for the first six months after the issue date. The composite rate combines a 0.10% fixed rate of return with the 1.54% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 236.119 in March 2015 to 237.945 in September 2015, a six-month change of 0.77%.

Although no one will get rich earning 0.1% above inflation, this is welcome news for I Bond investors. The fixed rate has been 0.0% since November 2014. In the six months ending Oct. 31, the inflation-adjusted rate for I Bonds was -1.60%, resulting in a composite rate of 0.0%.

Also, the Treasury said that EE Savings Bonds issued from today through April 30, 2016,  will earn a permanent fixed rate of 0.1%. This is down from 0.3% offered for the last six months. Most importantly, however, the Treasury retained its policy of double-principal if held for 20 years, creating a 20-year term that pays 3.5%, very generous in today’s market. Here is the announcement:

All Series EE bonds issued since May 2005 earn a fixed rate in the first 20 years after issue. At 20 years, the bonds will be worth at least two times their purchase price. The bonds will continue to earn interest at their original fixed rate for an additional 10 years unless new terms and conditions are announced before the final 10-year period begins.

Today’s announcement adds to the appeal of I Bonds and retains the appeal of EE Bonds. Pretty good news for investors.

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7 Responses to Treasury raises I Bond fixed rate to 0.1%

  1. Clara Hickey says:

    Thanks for the information. I appreciate the ease with which I can learn about I bonds and EE bonds through you. Very helpful.

  2. BigDaddyRich says:

    Let me add my thanks as well. Hopefully, the Fed will finally raise interest rates in December, which will really make I and EE Bonds a good buy come next May 1.

  3. 13_Legion says:

    Glad to hear this.

    I stayed away from the bonds this list six months because the 0%. Didn’t feel like receiving nothing for that time period. Even the bank is better than 0!

    I’ll be putting my normal quarterly buy in very soon.

  4. Clara Hickey says:

    Unbeknownst to you, some of the I Bonds you own may have been earning .0% for the past six months. It would depend on what your bonds’ fixed rates are. Thanks to this web site, I do now understand exactly how the rates are arrived at.

  5. David Michael says:

    Thank you for updating the I-Bond interest rates. Great blog that is so helpful to many of us out there. One question…why did the Treasury reduce the amount of bonds per year available to us consumers, from $30,000 each to $10,000? The government finally puts out a good, safe investment vehicle for the 99% of us, and then they screw it up. Bewildering!

  6. tipswatch says:

    David, welcome aboard as a reader. Feel free at any time to disagree with me. Everyone else does, at times loudly. It’s a rowdy bunch. I do remember the days when you could buy $30,000 per person, with a credit card. My wife and I loaded up, got lots of frequent flier miles. That credit card thing was doomed, but I have no idea why the Treasury scaled back the cap. It actually went to $5,000 per person for awhile, the was raised to $10,000. I personally think $20,000 would be a nice move, you could ladder those out very well in retirement and have secure income.

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