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EE/E Bonds Set to Change to Fixed Rate
Posted By Jim On 04/04/2005 @ 1:50 pm In Government | 1 Comment
In an press release today, EE/E Bonds  are going to be fixed-rate bonds starting on May 1, instead of variable rate as they have been for as long as I can remember. EE/E bonds have been great for those saving for college and the earnings are exempt from State and local taxes. They’re one of the popular safe methods of investing and they’re going to lose one of their great advantages, varying rates in a period of changing interest rates…
The change to a fixed rate of return on May 1 means that in this period of inevitable rising interest rates, you’re getting locked into a lower rate of return. This move will save the Federal government money. Right now you’re looking at a 3.25% interest rate that is about what you’d get on a good 2-year CD; if you factor in the exemption from State and local income taxes. If (more like when) rates go up, you’d be locked in so everyone better buy some EE/E bonds now or look for an alternative.
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 EE/E Bonds: http://www.treasurydirect.gov/indiv/products/prod_eebonds_glance.htm
 rates explained: http://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eeratesandterms.htm
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