If you have a collection of savings bonds, it may seem that each bond you own is earning a different interest rate. After decades of issuing savings bonds, the U.S. Treasury does have bonds in circulation with many different rates. The current rate system for savings bonds produces bonds with only two different rates over the course of a year.
Current Series EE Savings Bonds
The Series EE savings bonds issued since May 2005 earn a fixed rate of interest for the life of a bond. The rate for newly issued bonds is reset or adjusted on May 1 and November 1 each year. After the rate is set, every bond issued for the next 6 months will earn the same rate for up to 30 years. As a result of this rate policy, of the total number of savings bonds issued since May 2005, the maximum number of different interest rates is two times the number of years that have passed. As of mid-2012, savings bonds have been issued 14 different rates since May 2005. Series EE bonds earning less than 3.5 percent will receive a one-time interest bonus at the 20-year anniversary to bring a bonds value up to the guarantee doubling in value at 20 years.
Series I Savings Bonds
The interest rate earned on a Series I savings bond adjusts for the rate of inflation. A Series I bond earns a combined fixed rate of interest and an inflation adjusted interest rate. The fixed rate for new Series I bonds is set in the same manner as for Series EE bonds on May 1 and November 1. The inflation factor for the next six months is also set on those dates. The inflation factor for an I bond changes on the bond's annual and six-month anniversary months, using the inflation rate set the previous May or November. For example, a Series I bond which was purchased in July will earn the fixed rate in effect that July and will have the interest earned for inflation adjusted every July and January.
Older Savings Bonds
Savings bonds issued prior to May 2005 have the current interest rate adjusted every six months or annually, depending on the interest rate policy in effect at the time of issue. Bonds issued from May 1997 through April 2005 have the interest rate adjusted annually, using the rate set the previous May or November for that group of bonds. Savings bonds issued before May 1997 reached their maturity — double the initial cost -— value at 17 or 18 years after issue. When the maturity value is reached, these bonds will earn the same rate as new issue Series EE bonds.
Current Bond Values and Rates
The current value and interest rate for any savings bond can be found using the Savings Bond Calculator on the TreasuryDirect.gov website. The calculator link may be found under the tools website. To use the calculator, enter the type of bond, the denomination of a bond such as $100 or $500 and the issue date. The calculator will provide the interest rate the bond is currently earning, the total interest earned and the redemption value of the bond.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.