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Series I Savings Bonds Now Paying 3.36%

Written by Nickel - 7 Comments

Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.

This is just a quick note to say the new Series I U.S. Savings Bond interest rates have been released. I haven’t written much (anything?) about savings bonds in the past, but I’m planning on changing that in the near future.

In the mean time, I’ll just say this… The interest rate on Series I bonds is made up of a fixed rate component and an inflation component. Rates are updated twice a year, in May and November.

The latest update saw the fixed component increase from 0.10% to 0.3% and the inflation component went from 0% to 3.06%. In other words, they’re now offering a total return 3.36%, which compares favorably with prevailing CD rates.

For a bit of background, Series I bonds can be cashed in after a minimum of 1 year. If you break them between 1-5 years, there is a penalty of three months of interest. After five years, there is no penalty. More info here.

Source: TreasuryDirect and Bargaineering

Published on November 4th, 2009 - 7 Comments
Filed under: Saving & Investing

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Comments (scroll down to add your own):

  1. Yeah you should totally write more about them. I bought some back when the fixed rate was higher. Didn’t do well the last 6 months but they’re doing well overall.

    Comment by Anonymous — Nov 4th 2009 @ 8:26 pm
  2. Let’s not forget, the interest earned on US bonds, when received, is not taxed by the States. That adds to the rate of return.

    Comment by Anonymous — Nov 4th 2009 @ 9:18 pm
  3. Patty: Yep, that makes the deal even more attractive.

    Comment by Nickel — Nov 4th 2009 @ 9:50 pm
  4. @Nickel – We love the I Bonds…perhaps the best built financial instrument for emergency funds and cash reserves. The only thing that stinks is you can only buy $5,000/year per social security number.

    By the way, barring a significant interest rate hike in the next couple of months on savings/money market accounts, I Bonds (even after yielding ZERO for half of the year) will outpace the overwhelming majority of bank or mutual fund based money market and savings accounts.

    The way I see it, I Bonds are a nearly perfect vehicle for cash reserves. As an added bonus, there is no need to chase rates at banks because the rate will always keep up with inflation.

    Also, the real return (net of inflation) on these bonds has been terrific this year.

    Comment by Anonymous — Nov 5th 2009 @ 11:23 am
  5. Michael: It’s actually $5k electronic and $5k paper each year (per SSN), so $10k. Still not great, but better.

    Comment by Nickel — Nov 5th 2009 @ 1:42 pm
  6. Sheeeeeeeeeeit! I forgot about the paper.

    Comment by Anonymous — Nov 5th 2009 @ 9:11 pm
  7. o.k. so they are at is that 3.36% every 6 months or 3.36% over 30 yrs ?

    Comment by Anonymous — Jan 21st 2010 @ 2:44 am

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