[cb1972]

I am looking for clarification regarding I-Bonds. My understanding is the interest paid on these Bonds changes twice a year, May 1st, and November 1st.. According to the Treasury site, at any time you purchase a Bond you receive the rate established at the start of the six month time period which I believe is compounded as an APR. The interst rate will then be adjusted every six months on the target dates.
What I am trying to understand is , when you purchase the Bond do you receive the current rate for six months from purchase or until the window closes at the next target date?
Also since the the rate changes twice a year are the rates blended if you hold the bond for 1 year or more ? ex. if the rate is 4.5 for six months then 3 percent for the next six months is the Bond paying an APR on the blended rates which should be higher than the original 4.5.
Its predicted the rate on I Bonds will be around 3.07 percent effective November 1st. . CD rates are currently much higher.
Any
info would be appreciated thank you

[Caymus]

Originally Posted by cb1972

I am looking for clarification regarding I-Bonds. My understanding is the interest paid on these Bonds changes twice a year, May 1st, and November 1st.. According to the Treasury site, at any time you purchase a Bond you receive the rate established at the start of the six month time period which I believe is compounded as an APR. The interst rate will then be adjusted every six months on the target dates.
What I am trying to understand is , when you purchase the Bond do you receive the current rate for six months from purchase or until the window closes at the next target date?
Also since the the rate changes twice a year are the rates blended if you hold the bond for 1 year or more ? ex. if the rate is 4.5 for six months then 3 percent for the next six months is the Bond paying an APR on the blended rates which should be higher than the original 4.5.
Its predicted the rate on I Bonds will be around 3.07 percent effective November 1st. . CD rates are currently much higher.
Any
info would be appreciated thank you

No matter when you buy it, you receive the initial interest rate for 6 months. After that you will receive the May/November rate for the next 6 months. Sometimes they are also sold with an extra fixed rate which doesn't change over the 30 year duration.

Whether future I Bonds will do better than CD's is a matter of market conditions.

[Chi-Town]

Paid $10,000 for an I bond in 2001. It's worth $34,000 today. About a 6% annual return. Not bad.