IBonds.info News

New I Bond Rate: 3.36%

2009-11-02T08:59:00.000-08:00

The new I Bond rate was announced today, resulting in a 3.36% composite rate for newly purchased I Bonds for November 2009 through April 2010.

The new bond rate includes the 1.53% CPI-U linked rate and the newly announced 0.30% fixed rate. This fixed rate is up from last period's 0.10%, but is still fairly low compared to past fixed rates.

I-Bonds purchased in past periods keep their fixed rate, but will adjust to the new CPI-U linked rate on the 6 month anniversary of their purchase.

What Will the Next I-Bond Rate be?

2009-10-25T18:47:00.001-07:00

Now that we know the CPI-U linked rate of the next I bond period for November 2009 to April 2010, it is only natural to start speculating what the next fixed rate will be.

The fixed rate of an I-bond is set by the Treasury Department every 6 months in an unknown way, meaning we do not know what the next fixed rate will be. The current fixed rate is 0.10% and marks the 3rd consecutive sub-one percent fixed rate.

My personal guess is that we will see a return to the 1.0% fixed rate based on recent positive behavior in the economy. That would result in a composite rate of 4.08%.

Potential Composite Rate values based on potential fixed rate values

Theoretical Fixed Rate	Composite Rate
0.00%	3.06%
0.10%	3.16%
0.20%	3.26%
0.30%	3.36%
0.40%	3.47%
0.50%	3.57%
0.60%	3.67%
0.70%	3.77%
0.80%	3.87%
0.90%	3.97%
1.00%	4.08%
1.10%	4.18%
1.20%	4.28%
1.30%	4.38%
1.40%	4.48%

I-Bonds Info

Next Composite Rate for Existing I-Bonds

2009-10-25T18:32:00.001-07:00

Given the November-April CPI-I linked rate will be 1.53%, we can now calculate the composite rate of already issued I-bonds.

Composite rates for I-bonds during the November 09 - April 10 period

Fixed Rate	Composite Rate
0.00%	3.06%
0.10%	3.16%
0.70%	3.77%
1.00%	4.08%
1.10%	4.18%
1.20%	4.28%
1.30%	4.38%
1.40%	4.48%
1.60%	4.68%
2.00%	5.09%
3.00%	6.11%
3.30%	6.41%
3.40%	6.51%
3.60%	6.72%

I-Bond Rates

September CPI-U Value Released

2009-10-15T19:38:00.001-07:00

The CPI-U value for September increased again to 215.969, finishing the CPI-U change for the next I-Bond's rate. The November I Bond will have a CPI-U linked rate of 1.53%. This means, even if the fixed rate portion of the new bond is 0%, we are still looking at a new composite I Bond rate of 3.06%. We will know the actual fixed rate on November 1.

CPI-U Values for the November I Bond rate.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693	215.351	215.834	215.969

I-Bonds and CPI-U values

August CPI-U and I-Bonds

2009-09-29T19:14:00.001-07:00

The CPI-U for August rose slightly to 215.834 over July's value of 215.351.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693	215.351	215.834

With only one month remaining for this period, we should have a positive CPI-U rate for the November I-Bond. Hopefully the 0% days will come to a close soon.

I-Bonds and CPI-U values

July CPI-U Update

2009-08-26T12:02:00.001-07:00

The CPI-U value for July decreased slightly to 215.351 from June's value of 215.693

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693	215.351

The next rate is based on the difference between Match and September, so we have 2 more periods to watch before estimating the next rate.

I Bonds

June CPI-U Update

2009-07-28T18:51:00.001-07:00

The CPI-U value for June rose again to 215.693 from May's value of 213.240.

The CPI-U for this semi-annual period used to adjust the I Bond rate has increased 1.4% so far, with 3 more monthly periods left to measure.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693

I Bonds

May CPI-U Update

2009-06-17T19:38:00.001-07:00

The CPI-U value for May increased slightly over April's value of 213.240 to 213.856. The next I-bond rate is based on changes between March and September, so we still have a ways to go before making any predictions about the rate in November.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856

I-Bonds

April CPI-U Update

2009-05-16T06:53:00.001-07:00

The April CPI-U value increased to 213.240. This marks the 4th consecutive period of inflation.

We can now begin tracking the CPI-U values for the November I bond rate, which we all hope is better than the current 0% rate.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240

The November I bond inflation-linked rate is based on the change in CPI-U between March and September, which we will know by mid-October.

I Bonds & CPI-U

Is the I Bond rate really 0%?

2009-05-02T14:20:00.000-07:00

There have been a few questions whether or not the new I Bond rate is really 0%, or if that means there is no difference in rates from last time. Unfortunately, it means the rate your I Bonds will be earning is in fact 0%. If your bond is earning 5% right now, it will be dropping to 0% in the coming months.

Existing I Bonds will adjust to the new rate some time between May and October depending on when you purchased the bond. On the first day of the bond's 6 month anniversary of purchase, the bond will drop down to earning 0% for 6 months. It is the equivalent of having cash in your pocket for 6 months.

Thinking of selling? You should remember that I Bonds MUST be held for at least one year. Additionally, there is a penalty of 3 months of interest for redeeming within 5 years. If you want to sell a bond that is less than 5 years from issue, wait until the bond is 3 months into the 0% rate. That way, when you redeem the bond, the penalty is the past three months of 0% interest, meaning you lose no value as part of the penalty.

I Bonds Rate: 0% May - November 2009

2009-05-01T07:02:00.000-07:00

The new I bond rate for May to November 2009 will be 0.0%, as expected. The fixed rate will unfortunately drop to 0.1%.

All I bonds will drop to 0% as the deflation measured this period was significant enough to offset even the highest fixed rate ever issued. I bonds adjust rates every 6 months based on the issue month, so between now and November, bonds will drop down as they reach their 6 month mark.

I Bonds Rates

March CPI-U Value Released

2009-04-15T10:00:00.000-07:00

The CPI-U value for March inched slightly higher to 212.709. This value is still well below September's 218.783, meaning that the I Bond rate change in May will track deflation rather than inflation.

The deflation was severe enough to ensure all issued I bonds will fall to 0% for the 6-month period starting in May. As a bond reaches the 6-month anniversary from its issue month, the rate will fall to zero.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143	212.193	212.709

February CPI-U update

2009-03-24T20:14:00.001-07:00

The CPI-U value for February increased again to 212.193. This is still well below September's value of 218, so it is virtually impossible to have a positive value for the variable portion of I bonds for the next cycle.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143	212.193

At this point, it is almost certain all I bonds will see a rate of 0% for the 6-month cycle starting on May 1. The deflation aspect of the formula is simply too large a negative value to produce a positive return. Since the composite rate cannot be negative, the rate will be 0%. As previously purchased bonds hit their 6-month anniversary, the rate will drop to zero. In order for a new I bond to offer a non-zero rate, the fixed rate would have to be over 6%, which is not very likely.

The highest fixed rate ever was 3.60%, so maybe we can see an adjustment to something close to that again. Even with a 0% rate for 6 months, a high fixed-rate I bond would be a good investment if held for a long period of time. The bonds with the 3.60% fixed rate were earning 9.4% in November 2005!

I Bond CPI-U Values

January CPI-U Value

2009-02-20T16:33:00.001-08:00

The CPI-U rate for January 2009 increased to 211.143. The increase over December's 210.228 marks the first period of inflation instead of deflation for this cycle, but it is still far below September's 218.783, which is when the next inflation-linked rate will be derived from.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143

Even if we experience significant inflation in the next month, it is unlikely the CPI-U rate will reach 218 again. This means that the inflation-linked portion of the next I bond will still most likely be negative and is likely to result in a 0% period for most, if not all, I bonds.

The CPI-U would have to reach 215 before the highest fixed rate I bonds issued (3.6% fixed) would earn a non-zero return.

I bonds and CPI-U

December CPI-I Rate

2009-01-18T16:11:00.001-08:00

The CPI-U value for December dropped again to 210.228. The two point fall is the 5th consecutive month of deflation measured by the CPI-U.

What does this mean for I Bonds in May? Even if the fixed rate of your current bonds are not enough to offset the negative rate we are likely to see from deflation, the final rate on an I bond will never go below zero. If the current deflation continues, there are no fixed rates previously issued that would offset the deflation rate. It is very possible we will see a 0% rate for May-November.

Even if there is a 0% rate, you are still better off than keeping money under the mattress. Money invested in I Bonds is keeping its value while money under the mattress is losing value.

November CPI-U Rate Released

2008-12-16T16:22:00.001-08:00

November's CPI-U rate declined again to 212.425 from October's 216.573. This marks the fourth consecutive decline from July's high of 219.964.

It is still too early to guess what the next I Bond rate may be based on the data so far, but if continued decreases in the CPI-U value continue, the inflation portion of the bond could be zero.

October CPI-U Value Released

2008-11-27T10:38:00.001-08:00

The CPI-U value for October decreased from 218.783 in September to 216.573. This deflation wipes away the high inflation over the summer and returns the value back to levels seen in May.

This is the first month to be used in the inflation-linked rate for May 2009, so it is way too early to guess the next rate.

New IBond Rate 5.64%

2008-11-03T07:47:00.000-08:00

With an increase in the fixed rate to .70%, the new I-bond rate for November to April 09 will be 5.64%.

The CPI-U increase was 2.46%, as we knew, but the increase in the fixed rate was a pleasant surprise.

Fixed Rate: 0.70%
CPI-U Rate: 2.46%
IBond Rate: 5.64%

http://www.ibonds.info/rates.html

September CPI-U released, new rate guess

2008-10-16T18:22:00.001-07:00

The CPI-U measurement dropped for the second month in a row, ending at 218.783 - down from 219.086 in August.

We now know the CPI-U change from March to September, meaning the new inflation-linked portion of November's I Bond rate is ready. With an increase in CPI-U of 2.46%, we can expect to see November's I bond rate be 4.92%. This rate assumes a 0% fixed rate for the bond, which is what the fixed rate is currently. With the economic downturn we are experiencing, the 4.92% is attractive enough without raising the fixed rate, so it is unlikely we will see movement.

If you purchase a bond now, you will receive the 4.84% rate for 6 months, then the rate will adjust to the expected 4.92% in April.

I Bond rate for November 2008

August CPI-U released

2008-09-20T09:01:00.001-07:00

August's CPI-U value of 219.086 was released, showing a slight deflation from July's 219.964.

We now have 5 of the 6 months of CPI-U data for the next I-Bond rate in November. If we assume September's change remains along the average of the previous 5 months at 3.12%, we can expect a new I-bond rate of 6.24% assuming a 0% fixed rate.

Given the craziness of the economic environment today, the results for September's CPI-U could be anything. Since the average CPI-U for the past 5 months is pretty high, it is unlikely we will see a 6.24% I-Bond, but it will still be in that area.

I-Bonds continue to be a solid investment since they will always return a positive real return on your investment, which is exciting when even a money market account can't retain value these days.

What will the November rate be?

2008-09-13T09:24:00.001-07:00

With so much anticipation of the new I-Bond rate, people are already trying to figure out what it will be with only 4 of the 6 months of CPI-U data recorded so far.

July's CPI-U of 219.964 already shows a pretty sizeable increase over March's 213.528. A 3.01% CPI-U increase already! If we assume August and September continue the average of March-July, We would see a CPI-U increase of 4.52%.

Even with a 0% fixed rate, the CPI-U increase would cause a 9.04% I-Bond rate! It is unlikely that the August and September CPI-U increases will match the average of the previous 4 months, so it is not likely we will see 9% I-Bonds in November. We will see at least 6.02%, given current numbers.

Given that the CPI-U increase is already higher than the 6 month period for the last rate adjustment, it is very unlikely that the fixed rate will move up from the 0% it is currently.

Hopefully you have some I-Bonds with a non-zero fixed rate as they will be paying quite well in the next period if this inflation trend continues.

I Bond Rate for May-Oct 2008

2008-05-01T07:38:00.000-07:00

With a fixed rate of 0.0% and an inflation component of 2.42%, the rate for a new I bond purchased May-Oct is 4.84%. With a fixed rate of 0%, these I bonds are not very attractive for a long term investment.

Bonds purchased prior to May 1, 2008 will show the new 2.42% inflation component on the bond's 6 month anniversary. You can use the calculator on the I bond rates page to find the new rate of your bond based on the fixed rate of the bond and the 2.42% CPI-U rate.

CPI-U Rate released

2008-04-16T18:11:00.001-07:00

The March CPI-U numbers were released, setting the next I bond inflation component to 2.416%. Bonds purchased in April will recieve 4.28% for 6 months, then jump up to a respectable 6.06%.

Since the inflation component is fairly high, you can almost gurantee the fixed rate of bonds sold in the next cycle will be dropped from the current 1.2%. The historical low has been 1.0% for the fixed rate, so I expect to see that.

Given a 1.0% fixed rate, a new I bond would recieve a 5.86% rate.
Given a 1.1% fixed rate, a new I bond would recieve a 5.96% rate.

The new fixed rate will be announced when the rate goes into effect for new bonds on May 1.

I Bond Rate Calculator

Purchase Limits Reduced to $5000

2007-12-04T13:10:00.001-08:00

The Treasury Department reduced the maximum amount of bonds that can be purchased for 2008 from the current $30,000 to $5,000. This applies to paper and electronic bonds, so you can still purchase up to $10,000 annually.

You can read more from the press release

Bond Rate for November - April

2007-11-01T07:19:00.000-07:00

The Fixed portion has been adjusted to 1.20% for new bonds purchased in this period. The inflation adjustment was 1.53%, meaning the variable portion of all bonds will be 3.08%.

A new bond will earn 4.28% for the first six months. Existing bonds will adjust to the new variable rate or 3.08% on the six month anniversary of the purchase date (the fixed rate portion remains the same for the life of the bond).

Series I Bonds, I Bonds, IBonds, US I Bonds, I Bond Rate