interest rate image

How Do Financial Market Rate Hikes Affect Savings Bond Performance?

interest rate image

U.S. Savings Bonds interest rate performance is often closely ties to financial markets. But, do each of the different bond series get effected in the same way?

It depends. U.S. Savings Bonds do not all perform the same and have different rules and regulations based on the series (EE or I) and the issue date. Bonds with a fixed rate of interest for the life of the bond will not improve even though rates may increase. Bonds offering a combination of a fixed rate (remains the same for the life of the bond), along with a variable rate (that can, and usually does change) every six months will likely see an increase.


Keep in mind, the savings bond interest rates announced by the Treasury every May 1 and November 1 applies only to new bonds purchased during the next six months. That rate does not necessarily apply to older bonds.

Confused? A complimentary savings bond calculator and Savings Bond Inventory Report will indicate exact interest rate performance for each paper savings bond.

Savings Bonds Interest Rates 101:

  • Savings Bond interest rates are closely tied to the Treasury market-based securities.
  • If market rates go up, savings bond rates will usually follow.
  • Recent U.S. financial market interest rate increases (along with the CPI-U) will likely improve the overall interest rate performance for many savings bonds – old and new NOT earning a fixed interest rate.

Series EE Savings Bonds

  • EE Bonds issued since 2005 will earn a fixed rate of interest, which will remain the same for the first 20 years of the bonds life.
  • After the first 20 years, that rate may change and bond owners will be notified before the rate changes.

EE bonds purchased from May 2018 through October 2018 will earn a fixed rate of interest of 0.10% (for the next 20 years).

The recent savings bond rate increases will not affect EE (electronic) bonds that were purchased since 2005. A disadvantage of owning EE bonds with fixed interest rates is that if there is a period of higher interest rates, unfortunately, interest rates won’t go upon on those bonds.

Older Series E or EE BondsVarious interest rates, formulae, rules and regulations for paper bonds have been implemented since savings bonds were issued in 1935 to make them attractive to investors. You might need a PHD in finance to try to figure it all out. Click here for detailed information on E, EE bond rules, rates and formulae based on issue dates.


Series I Savings Bonds

  • The interest rate on Series I Savings Bonds is a combination of a fixed rate (currently set at .30%), which remains the same for the life of the bond, along with an inflation rate (2.22%), which usually changes every six months.
  • NEW I Bonds purchased May 2018 through October 2018 will earn 2.52% for the next six months.
  • The inflation rate announced each May and November, is based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
  • For older bonds, the inflation rates (announced every 6 months) are combined with all the prior years interest rates to create the new overall yield.
  • Since current interest rates are on the rise, it is likely that that saving bond rates will likely increase.

To eliminate guesswork or confusion, use an online bond calculator to easily determine the interest rates for every (paper) savings bond you own.

Attractive I Bond Rates

Some older I bonds were purchased with a very attractive fixed interest rate portion that provides high-interest rate performance. For example, a Series I Bond purchased in May 2000, is currently earning an impressive 6.12%.

Savings Bonds Never Lose Money

Even in times of deflation savings bonds may not earn any interest for a specific period however, they will never actually lose money or decrease in value. U.S. Savings Bonds are guaranteed and backed by the full faith and credit of the U.S. government.

To receive monthly savings bond statements delivered via email that will help eliminate confusion, and deliver current interest rate performance for any paper savings bonds, use an online bond management service.

Economists expect overall interest rates to continue to rise. Savings bond rates will likely follow.  Always check interest rate performance on all bonds especially if you plan to redeem any of them. You should redeem the worst performing bonds first and hold onto the better performers.’s Cash-In Report can help with this process.


About is an online financial bond management company providing essential U.S. Savings Bond information since 1992. For over 26 years, bond experts have created various consumer programs, tools and services not offered elsewhere, including an online complimentary savings bond calculator, providing cash in values with important financial information presented on a personalized, color-coded Savings Bond Inventory Report. Unique savings bond management services include signature monthly summary emailed Savings Bond Statements, which help bond owners maximize their investment, avoid losing money and paying unnecessary taxes.

Last Updated: February 26, 2019

About the author

Jackie Brahney is the Marketing and Editorial Director and most notably, an U.S. Savings Bond Expert for Since 1991, she has done extensive research on savings bonds and state of the art savings bond valuation systems, and heads the company's public relations and marketing initiatives.

Leave a Reply

Your email address will not be published. Required fields are marked *