Estimated rate for November 1 (assuming no inflation September 2017 and no fixed rate): 1.32%
How does Treasury figure the I bond interest rate?
The interest on I bonds is a combination of a fixed rate, and an inflation rate.[…]
You know the fixed rate of interest that you will get for your bond when you buy the bond. That fixed rate does not change during the life of the bond.
Treasury announces the fixed rate for I bonds every six months (on the first business day in May and on the first business day in November). That fixed rate then applies to all I bonds issued during the next six months.
The fixed rate is an annual rate. Compounding is semiannual.
Unlike the fixed rate which does not change for the life of the bond, the inflation rate can and usually does change every six months.
We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
However, the change is applied to your bond every six months from the bond’s issue date. (The dates for these changes might not be May 1 and November 1.)
Bond rate formula: [fixed rate + (2 x inflation rate) + (fixed rate x inflation rate)]
Index values (source: https://data.bls.gov/cgi-bin/surveymost) Table CUUR0000SA0
September 2017: ??? (release on October 13)
August 2017: 245.419
July 2017: 244.786
June 2017: 244.955
May 2017: 244.733
April 2017: 244.524
March 2017 (base for next period): 243.801
I-Bond fixed rate history: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#past
- Always buy a bond towards the end of the month and redeem at the beginning of the month. Purchases and redemptions are always dated on the first day of the month regardless of when in the month they are purchased. Generally make an order in Treasury Direct two business days prior to the last day of the month in order to allow proper time for ACH to occur.
- You can purchase $10,000 a calendar year per social security number and $5,000 with a tax refund of a timely filed return. (If you do not file the return timely, including extensions, and fill out the form they will send you a check instead.)
- There is a minimum 12 calendar month holding period and for the first five years the last three months of interest are withheld as a penalty. You can redeem bonds before the 12 months if you are in a Federally declared disaster area (regardless of whether you personally suffered from the disaster).
- I Bonds pay interest for 30 years. Interest is taxable on redemption, unless you choose to declare interest annually (keep records to reconcile with the 1099-INT that is inevitably issued at redemption). They are generally exempt from state income tax.
- EE Bonds function as a 3.5% interest rate bond when held for exactly 20 years, but with a hefty early withdrawal penalty since the base rate is extremely low (0.10% at current writing). In high income tax states, they can function as “substitute pensions” for those who desired more fixed income in retirement. Older EE Bonds pay at a different formula and were market adjusted and may still be good investments to hold.
- From 1998 to 2003, one could purchase I Bonds with credit cards, and the maximum was $30,000 a year. This was the original dollar coin deal and the bonds purchased at that time have a minimum of 1.1%, and in some case 3%, fixed rates. However few people took advantage of it because of the skyrocketing stock market.