I-Bonds Rates

Savings Bonds: Series I – Basics

One fairly new type of savings bond is the series I bond. The intent of the Series I bond is to provide protection for the bond owner from inflation. The following table shows the basic characteristics of Series I savings bonds.

Features of Series I Bonds
Issued September 1998 – Present
Type Accrual type where interest is added to the bond value monthly
Purchase Cost Face value (a $100 I bond costs $100)
Denominations Paper bonds:$50; $75; $100; $200; $500; $1,000; $5,000. Electronic bonds via Treasury Direct: purchase to the penny for $25 or more
Limit $5,000 in Treasury Direct electronic bonds and $5,000 in paper bonds
Transferability no
Investment Yield Accumulate interest calculated monthly and compounded semi-annually;
Accrual of earnings based on the fixed interest rate and the semiannual inflation rate which are announced in May and November
There is no guarantee level of earnings.
If there are any earnings, they accrue on the first day of each month, but the redemption value does not change between accrual dates.
The maturity period is 30 years (20 original years and 10 extension years.)
I bonds stop increasing in value after 30 years.
To check out current yields, click here.
Redemption If purchased before Feb. 2003, cannot be redeemed until 6 months after issue. If purchased after Feb. 2003, cannot be redeemed until 12 months after issue. Can be redeemed at your financial institution.

Interest for I bonds is based on a composite earnings rate. This rate is determined by a formula combining a fixed rate and an inflation rate which change every six months. The composite rate of 4.08% for the period of November 2002 to May 2003 was figured as follows:


fixed rate = 1.60%
inflation rate = 1.23%
composite rate = [fixed rate + 2 x inflation rate + (inflation rate x fixed rate)] x 100 =
[.0160 + 2 x 0.0123 + (0.0123 x 0.0160)] x 100 =
4.08%



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