Savings I-Bonds November 2010 Fixed Rate: 0.0%

The new fixed rate for Series I Savings Bonds (“I Bonds”) was announced on 11/1/10 to be 0.0%, down from the previous fixed rate of 0.20%. Inflation protection is being held at a relative premium right now, so this isn’t all that surprising.

As predicted earlier, the new variable inflation-linked rate will be 0.74%. The total composite rate = fixed rate + variable inflation rate. Thus, any Series I savings bonds bought in November will have a total rate of 0 + 0.74 =0.74% for 6 months. If you already own I-Bonds, your fixed rate is always the same but the variable rate changes every six months from your purchase month, so it may not immediately change over this month.

Despite the relatively low fixed and variable rates, there are several unique advantages of savings I-bonds that can make them a potentially desirable investment. Combine this with their low annual purchase limits, and I am holding on to my bonds (and bought more last month in October).

For more related info, see the rest of my savings bonds posts.

Comments

  1. When I first saw it, I thought, “This rate is such a joke.” But then I realized it could be worse. The fixed rate could be negative.

    I don’t think I’m getting any more I-bonds for a long time.

  2. Wow, maybe it should be called something else besides a “savings bond” now, eh?

  3. So what does this mean for my I series bonds I bought many years ago? Are they now earning 0% interest? I need to research this more…

  4. Michelle, the 0% rate applies to new bonds only bought from Nov.1.

    I have I bonds going back allot of years and they are at 4% to 6%+.

    Use the http://www.Treasurydirect.gov site, it is actually very good, to find out what they are worth.

  5. It doesn’t make sense to buy this without a good fixed rate. The reason is that the CPI is already a low-ball inflation indicator with about 42% in housing. Well, if you’re a houseowner, you’re NOT necessarily spending less when housing price goes down (lower tax is offset by higher insurance).

  6. I-bonds with a fixed rate of less than approx .8% will not keep up with inflation after taxes. The exact value depends on your tax rate, inflation rate, number of years held, etc.

  7. Why would anyone buy this? At this point, you would do better buying some nonperishable food and stuffing it under the bed or at the back of the closet.

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