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# Series I Savings Bond Rate Update (November 2011)

Now is a great time to buy yourself a Series I Bond and I will probably be loading up on some Series I bonds before the month ends. Why you ask? With my crystal ball, I know that the interest you can earn on Series I savings bonds is going to be pretty good. And pretty good for the next year. ðŸ™‚

## Calculating New Rate

Every six months, the Series I bond’s rate gets adjusted for inflation. It happens on November 1st and May 1st. Since the CPI-U [3] is used and published every single month, we are basically given all the tools we need to calculate this. September 2011 CPI-U was 226.889 and March 2011 CPI-U was 223.467, which gives us a semi-annual (6 month) increase of 1.53%.

Plug that into the series I bond rate equation, assuming a fixed rate of 0%, and you’re left with a bond that will yield a whopping 4.60%. If the fixed rate is higher, which is a huge if and one I’m pretty sure will not happen, the rate will be higher.

## Two Series I Bond Quirks

Remember there are two quirks with Series I Bonds:

• When you buy it in a month, you get credit for the whole month. So buy on October 31st and you get credit for all of October.
• Whatever period you buy in (if you buy one now, you’re in the May 2011 through October 2011 period), you get that period’s fixed and inflation rates for the next six months. The current rate is 4.60% assuming you have a 0% fixed rate, which is what you’d have if you bought it anytime between May 2011 and October 2011.

## Why Is It A Good Time?

What does this mean? If you buy a bond today, you will get 4.60% for six months and then 3.06% for another six months. That crushes anything you can get at a high yield savings account [4]. The only thing to remember is that you can’t closed or redeem them within a year and if you redeem it before five years, you surrender the last three month’s of interest. Even with those stipulations, it’s a pretty solid deal.

If you have an old bond with a different fixed rate, you can use my handy Series I Bond rate calculator [5] to find your new rate.