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Treasury Raises I Bond Fixed Rate To 0.1%, Sets Composite Rate At 2.58%

Nov. 01, 2017 10:42 AM ETTIP24 Comments
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  • Investors waiting to complete their I Bond allocation for 2017 have the green light: Buy in November.
  • A fixed rate of 0.1% means these I Bonds should be held longer than I Bonds with a fixed rate of 0.0%.
  • Terms on EE Bonds remained the same: A fixed rate of 0.1%, but a doubling in value if held for 20 years.

I BondsThe U.S. Treasury just announced that it is raising the fixed rate on Series I Savings Bonds to 0.1%, a much-anticipated move for buyers of these inflation-protected investments.

Combined with the inflation-adjusted variable rate of 2.48%, I Bonds purchased from November 1, 2017, to April 30, 2018, will carry a composite interest rate of 2.58% for six months. Here is the Treasury's explanation:

The composite rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the 30-year life of the bond, and the semiannual inflation rate. The 2.58% composite rate for I bonds bought from November 2017 through April 2018 applies for the first six months after the issue date. The composite rate combines a 0.10% fixed rate of return with the 2.48% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 243.801 in March 2017 to 246.819 in September 2017, a six-month change of 1.24%.

I had speculated last week that rising real yields for 5- and 10-year Treasury Inflation-Protected Securities justified an increase in the fixed rate, but nothing is ever certain with these Treasury announcements. Here is that updated data, with fixed rates above zero shown in yellow:

I Bonds Fixed Rate

What this means for I Bond investors. Good news! Investors waiting to complete their I Bond purchase allocation for 2017 - $10,000 per person per year - should be buying I Bonds in the month of November. It's OK to wait a few weeks; purchases at the end of the month earn interest for the entire month.

As you can see in the chart, I Bond investors have gone through long stretches of time recently with the fixed rate stuck at 0.0%. Today's announcement, combined with a very good variable rate of 2.48%, makes I Bonds

This article was written by

Tipswatch profile picture
I am no longer writing for this site. More details. I will continue to post updates at my site, TipsWatch.com.-----David Enna is a long-time journalist based in Charlotte, N.C. A past recipient of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website. The Tipswatch blog, which launched in April 2011, explores ideas, benefits and cautions about U.S. Series I Bonds and Treasury Inflation-Protected Securities, which David believes are an under-appreciated and under-used investments. David has been investing in TIPS and I Bonds since 1998.

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