SavingsBonds.com Explains The Impact New November 2018 Savings Bond Interest Rates Have On New And Old Bonds.

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November 2018 semi-annual savings bond interest rates with have been posted on SavingsBonds.com's website (http://www.SavingsBonds.com). Series I Bond interest rates have increased, while EE Bond rates remain flat; learn what impact these new interest rates have on older savings bonds.

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New semi-annual savings bond interest rates apply only to new bond purchases. Most older bond are not likely earning these rates. Unless you are a financial genius, use an online savings bond calculator to determine the interest rates older bonds are earning. - Jackie Brahney, SavingsBonds.com

SavingsBonds.com has posted the new November 2018 semi-annual U.S. Savings Bond interest rates for Series EE and I Savings Bonds on their website http://www.SavingsBonds.com. The new interest rates apply only to new savings bonds issued between November 1, 2018 and April 30, 2019. Most older bonds will not earn these interest rates.

Series I Bonds issued November 2018 through April 2019 will earn a composite rate of 2.83% (until April 30, 2019). This represents a rate increase of .31% from the previous six months.

I Bonds are comprised of a fixed rate (currently set at .50%) which remains the same for the life of the bond, along with an inflation rate, which changes every six months, currently set at 2.33% (until April 30, 2019). Investors will earn the 2.83% rate for a six-month period from their I Bonds issue date (if bonds are issued between November 2018 through April 2019).

Series EE Bonds issued November 2018 through April 2019, will earn a fixed interest rate of .10%. Surprisingly, that rate has not changed in over three years (since November 1, 2015).

EE bonds issued since May 2005 are assigned a fixed interest rate that will remain the same for at least the first 20 years of the bonds 30-year life. The Treasury may change that interest rate for the last 10 years (years 20-30). If they make a rate or formulae change, it must be done before the 10-year period starts. We will have to wait until at least 2025 to see if this happens.

“Savings bond interest rates can vary a lot depending on the series and issue date. Numerous interest rates, formulae, rules and regulations have been implemented since bonds began being sold in 1935, in an attempt to make them an attractive, competitive investment.” - Jackie Brahney, Savings Bond Expert

Older Savings Bonds

For older bonds (not earning a fixed rate) the semi-annual interest rates announced every 6 months (May and November) are combined with all the prior years interest rates to create the new overall yield, based on the formulae in effect for each bond.

Fortunately, many investors are sitting on (older) bonds earning much higher interest rates as they were likely purchased when financial market rates were much higher. For example, a May 2000 series I Bond fixed rate portion was set at an impressive 3.60%, which will remain the same until 2030! That fixed rate, along with the variable rate, is currently yielding 5.96%.* Learn more about how I Bond rates are calculated.

The highest fixed EE Bond interest rates to date are earning 3.70%, issued May 2006 through October 2006. Any EE Bonds purchased in that six month window will earn that rate for at least 20 years from their bonds issue date. EE Bonds purchased before 2005, are earning various interest rates based on their purchase dates. Learn more about how EE Bond rates are calculated.

Confused About Interest Rates?

Unless you are holding fixed rate EE Bonds, trying to determine what rate a savings bond is earning can be daunting. SavingsBonds.com's complimentary online bond calculator eliminates the guesswork by providing guaranteed accurate cash in values, current interest rates and important financial, maturity and potential taxation issues for (paper) savings bonds.

U.S. financial market interest rates appear to be on the rise and will likely improve the overall performance for most savings bonds (not earning a fixed rate) since savings bond rate formulae are closely tied to these markets.

Always check interest rate performance, maturity dates and never arbitrarily cash-in bonds. Some bonds could be earning approximately 6% while others are only earning a mere .10%. Too many investors mistakenly grab the oldest bonds in their pile when cashing in. Some of them may be the best performers. Those that are no longer earning any interest should be redeemed first, followed by the ones earning the lowest interest rates. SavingsBonds.com also suggests that you learn the total interest earned amounts that should be reported on a Federal Income Tax Return - in the year the bonds are redeemed - before running down to the bank to cash them in.

About SavingsBonds.com:

SavingsBonds.com is an online financial bond management company providing essential U.S. Savings Bond information since 1992. For over 26 years, bond experts have created various consumer programs, tools and services not offered elsewhere, including an online complimentary savings bond calculator, providing cash in values with important financial information presented on a personalized, color-coded, Savings Bond Inventory Report. Unique savings bond management services include signature monthly summary emailed Savings Bond Statements, which help bond owners maximize their investment, avoid losing money and paying unnecessary taxes.

By Jackie Brahney, SavingsBonds.com, jbrahney@savingsbonds.com, 732-887-8941

*interest rate as of November 2018

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Jackie Brahney
@savingsbondsgal
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