About a week ago, I posted about the forthcoming Series I Savings Bond interest rates. For those that are unaware, these rates update twice per year, and are composed of both a fixed and a variable component.
The variable component is based on recent inflation and, as I noted in my previous post, the variable portion of the rate will be 0.74% for the next six months. What was unknown at the time was the fate of the fixed portion of the rate.
Well… I just received an e-mail from the U.S. Treasury, and here’s waht they had to say:
The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 0.74% earnings rate for I bonds bought from November 2010 through April 2011 also will apply for the succeeding six months after the issue date. The earnings rate combines a 0.00% fixed rate of return with the 0.74% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).
(bold emphasis added)
Keeping in mind that the fixed portion of the rate applies for the life of the bond, now doesn’t look like a particularly good time to buy I Bonds. We’ve already bought our allotment for 2010, so this isn’t a huge deal for us. That being said, we’ll definitely be waiting for May 2011 (and hoping for a non-zero fixed rate) before putting any more money into I Bonds.
It’s not surprising they’re going to 0.00% considering QE2 is on the horizon… I’m surprised they didn’t go negative! 🙂
Well can’t say I’m surprised with the way rates are lately. I’m just happy I still have my 1.2% fixed rate from a couple of years ago. And to think I thought THAT was too low at the time….