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Treasury Cuts I Bond Fixed Rate To Zero Percent

Monday, November 1, 2010 - 9:21 AM
The Treasury just came out with their new I Bond and EE Bond yields.

Treasury Direct Press Release

The Treasury continues to be stingy with the I Bonds. They cut the fixed rate from 0.20% to 0.00%.

The inflation component was already known due to September CPI data. It's 0.74%. So the combined yield is 0.74%. This will be the yield for any new I Bonds purchased until May 2011. The yield will last for 6 months from the month it was purchased. It will then change based on the next new inflation component. The fixed rate will stay zero percent for the life of the bond.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Monday, November 1, 2010 - 9:58 AM
EE bonds are now 0.60%
BobBob3 posts since
Sep 17, 2010
Rep Points: 21
2. Monday, November 1, 2010 - 12:34 PM
Thanks. I had forgot to post the new EE bond yield. As you can see in the Savings Bond Advisor blog post, 0.60% is the lowest the EE bond yield has even been. However, the EE bond does have one nice feature. If you hold the EE bond for 20 years, the EE bond is guaranteed to double in value. Here's what is stated at Treasury Direct:
They are purchased for 50% of their face value (for example, a $100 EE bond costs $50). This means that they take longer to mature than electronic bonds, as their value is based on interest rates. They are guaranteed to reach face value in 20 years.

Doubling in 20 years equates to a yield of about 3.50%.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708