[whaskins09]

Originally Posted by baselle

Interest is applied on the first of the month, so on Nov 1 your 10/2005 bond's interest rate will change to the higher rate, and will keep that total interest rate for 6 months when it changes to a new one.

Originally Posted by suedavids

you can buy them before Nov 1st but they are paying ( in this 6 month period) about 4.8%. If you bought them in oct. you would get this rate for the next 6 months then they would pay another rate 6 months latter( depending on the calculations of base + inflation).

However, if they go to 7% for the 6 month period and you bought them in Oct. you would not get that rate (instead you would get 4.8% for 6 months). In other words, you would get the rate within the 6 month period that you bought it. As I mentioned before though, 6 months latter it will be set at a new rate.

I was wondering if someone could clear this up for me because I'm a little confused.

*Lets say I bought an I-Bond in October. When November 1st rolls around would the variable interest rate of the bond change to reflect November or would I have been stuck with the variable rate for October for the next 6 months?

*Is it possible to buy an I-Bond in February 2006 and still receive 6 months of the same variable interest rate that was applied to the November-April time period? Or would the variable interest rate of the I-Bond purchased in February change in April to match the 6-month time period of the November I-Bond and therefore I would only recieve two months of the 5.75 variable interest rate?

*Lastly, I know this is a "dumb" question but is the interest accumulated in an I-Bond compounded or is it simple?

Thanks a million.