I-Bond Interest Rate Set At 6.73%

[jeffrey]

The Treasury Department announced today that the I-Bond rate from November 1, 2005 until April 1, 2006 is 6.73%. This rate includes a fixed rate of 1.0% (lowered from 1.2%) and an inflation adjusted rate of 5.73%. This is well above the interest rate that even popular Internet banks such as ING (3.4%) and Emigrant Direct (4.0%) are paying.




There are a number of aspects to the I-Bond that it's important to know:

* You can redeem I-Bonds at any time after a 12-month minimum holding period.

* If you redeem I-Bonds within the first 5 years, There is a 3 month ( the most recent months' interest) penalty

*If you redeem I-Bonds after 5 years, there is no penalty.

*There is a fixed and a variable rate to the I-Bond. The fixed rate (currently 1.00%) stays fixed throughout the life of the bond and the variable rate is adjusted depending on the inflation rate every six months.

For those interested in purchasing the I-Bond, the best time to do so is toward the end of November. This is because the interest is received for the entire month even if the I-Bond is purchased at the end of the month. For more information about the I-Bond, you can read the discussion in the forums.