MM Money

I Bond Should Hold Steady, But EE May Jump

Excerpt: Spiking costs for gas, food, tuition and insurance may be gobbling the cash in your wallet, but the government thinks it's just tiny nibbles. As a result, the popular, inflation-fighting I bond may spend the next six months at or near its current rate of 3.39 percent when it's adjusted for inflation Nov. 1.

Spiking costs for gas, food, tuition and insurance may be gobbling the cash in your wallet, but the government thinks it's just tiny nibbles. As a result, the popular, inflation-fighting I bond may spend the next six months at or near its current rate of 3.39 percent when it's adjusted for inflation Nov. 1.

The 3.39 percent is a composite made up of a fixed rate of 1 percent, which you get for as long as you own the bond, and an inflation component of 2.38 percent, adjusted semiannually. (The slight discrepancy is due to the way the composite is calculated.)

Dan Pederson, author of Savings Bonds: When to Hold, When to Fold, and Everything In-Between, says the most recent Consumer Price Index shows little change over the past six months.

"That will put the I bond rate at about where we were the last time, 3.39 percent. It will be within 10 basis points of that, a very narrow range. If they leave the fixed rate at 1 percent, you get a composite rate that's very similar. The only reason to buy an I bond now [before Nov. 1] would be if you think they'll lower the fixed rate."

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