I Savings Bonds

by Cara Scatizzi

I Savings Bonds are government bonds that pay both a fixed interest rate and an adjustable interest rate that corresponds with the U.S. Consumer Price Index (CPI).

The fixed rate of return is determined when the bond is purchased. The variable rate is calculated semiannually based on the inflation rate.

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About the author

Cara Scatizzi is a former associate financial analyst at AAII.
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How It Works

The variable rate on an I Savings Bond is determined using the Consumer Price Index for Urban Consumers (CPI-U) for the months of May and November of each year. Fixed rates and semiannual inflation rates are combined to determine composite earnings rates. An I Bond’s composite earnings rate changes every six months after its issue date.

Fixed and variable rates for I Savings Bonds issued over the last 10 years are posted on the Treasury Direct Web site (www.treasurydirect.gov).

To read more, please become an AAII Registered User or CLICK HERE.

→ Cara Scatizzi is a former associate financial analyst at AAII.

Discussion

The annual purchase limit for online United States Savings Bonds is $10,000 per series, effective January 4, 2012. http://www.treasurydirect.gov/news/pressroom/pressroom_com0112.htm

posted about 1 year ago by Adam from Alabama

October 2009 Issue

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I Savings Bonds
An investor reference for products that are not your typical offering. This issue's focus is on I Savings Bonds--government bonds that pay both a fixed interest rate and an adjustable interest rate that corresponds with the U.S. Consumer Price Index (CPI).

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