Series I Savings Bond Rate - November 2012

by Michael on Nov 1, 2012

Photo of Old Bond Certificate

The BLS has just released the September 2012 inflation numbers which means that we can now predict the Nov 2012 I-Bond rate.

As a reminder, I-Bond rates are pegged (in part) to inflation estimates, though there is also a fixed component set by the Treasury.

The inflation component is variable and reflects recent changes in the CPI-U, whereas the fixed component is a premium to inflation, and thus represents your “real” return (ignoring taxes).

The CPI-U increased from 229.392 in March 2012 to 231.407 in September 2012. That’s a semi-annual increase of 0.88%, calculated as follows:

231.407 / 229.392 = 1.0088

Doubling that gives us an annual (variable) rate of 1.76% vs. the current variable rate of 2.21%. The current fixed rate is 0%. We won’t know the new fixed rate until Nove 1st, but I’d be shocked if they increased it.

Update: As expected, no increase in the fixed rate.

So… If you buy between November 1st 2012 and April 30th, 2013 you’ll lock in a composite rate of 1.76% followed by six months at whatever the new rate happens to be in May 2013.


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