How Much Money Do Savings Bonds Earn?
The bottom line for returns on savings bonds sounds like the fable about the tortoise and the hare: slow and steady wins the race. Backed by the US government, savings bonds are extremely safe. But a tradeoff for that safety is a relatively low rate of return.
- New series EE and I bond rates are announced every six months.
- If you redeem savings bonds within the first five years, you'll be penalized a certain amount of interest.
What EE bonds earn
The current interest rate on Series EE bonds is 0.10 percent, through April 2016. New interest rates are announced twice a year and take effect May 1 and November 1. EE bonds issued from May 2005 onward will earn the new rate. EE bonds issued from May 1997 through April 2005 continue to earn market-based interest rates set at 90% of the average 5-year Treasury securities yields for the preceding six months. Their interest rates change periodically. Earnings vary for Series EE bonds issued from 1980 to 1997, so consult your financial institution or the Bureau of Public Debt for exact figures. Many Series E bonds have stopped paying interest. You receive the interest earned along with your principal when you cash in the bond.
What HH bonds earn
Series HH bonds pay a fixed rate of interest from the date you purchased the bonds. The present rate is 1.5 percent and has been in effect since January 1, 2003. This rate is locked in for twenty years after purchase, after which Series HH bonds will stop paying interest. You receive interest payments on your HH bonds twice a year. Note: Series HH/H bonds have not been available for sale or exchange after August, 2004.
What I bonds earn
With a Series I bond, you receive the interest earned along with your principal when you cash in the bond. The federal government developed Series I bonds to assure investors a rate of return above inflation. Historically, some savings bonds have, in reality, lost purchasing power during periods of high inflation. Series I bonds bought from November 1, 2015 through April 30, 2016 will earn 1.64% interest during this six-month period. The rate for Series I bonds issued during this period is a combination of a fixed rate (fixed for the life of the bond) plus an adjustable rate (adjusted every six months) based on inflation. The fixed rate changes every six months as well, though you are locked into it when you buy your bond.
Note that if you redeem I bonds within the first five years, you'll forfeit the 3 most recent months' interest; after 5 years, you won't be penalized.
For current US savings bond rates, go to www.treasurydirect.gov/indiv/indiv.htm.