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The savings bonds interest rates are set every 6 months in May and November. Here is the I-series bond interest announcement from this month’s news release.

I Bond Earnings Rate of 4.60% includes Fixed Rate of 0.00%
The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 4.60% earnings rate for I bonds bought from May 2011 through October 2011 also will apply for the succeeding six months after the issue date. The earnings rate combines a 0.00% fixed rate of return with the 4.60% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 218.439 in September 2010 to 223.467 in March 2011, a six-month increase of 2.30%.

4.6% is quite a respectable rate considering all other options available. It is definitely time to buy I-series bonds for the next 6 months. The rate of inflation adjustment changes rates on older I-bonds as well. Some of the I-bonds that were purchased 10 years ago are yielding 6.65% (as they have higher fixed rate of 2.05%) with this month’s adjustment.

A well known trick to squeeze a few more pennies… Buy the I-bonds towards the end of the month but, the interest is paid for the whole month as if the bond was bought on the first of the month.

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