What Are the Two Types of Savings Bonds & Their Interest Rates?
There are two types of U.S. savings bonds available today, Series EE and Series I. Here’s how their interest rates work:
- Series EE: For Series EE bonds issued from November 2019 to April 2020, you’ll earn an interest rate of 0.1%. If that seems low, it is. It’s the rate that works out to only $10,200 if you cash in a day short of 20 years, as mentioned above. But the U.S. Treasury “guarantees” you will double your money if you hold a Series EE bond for 20 years.3 So, Treasury makes a one-time adjustment on the 20th anniversary of the day you bought the bond, to value it at double the original face value.
- Series I: These bonds earn a variable interest rate tied to inflation, and there is no doubling promise. Instead, Series I bond interest rates include two components: a fixed rate for the life of the bond, plus a variable component that rises and falls depending on the inflation rate, and is updated twice a year.4
For example, for Series I bonds issued from November 2019 through April 2020, the combined interest rate is 2.22%. The two components in this case are a fixed rate of 0.20% and an inflation rate of 2.02%.5
As a result, investors can use Series I bonds to protect against rising inflation. For example, if you believe inflation is going to rise from its current low level to the mid-teens, as it did in the 1980s6, Series I bonds would be a far better savings choice then Series EE, because the Series I interest rate automatically rises with inflation. But if you think inflation will stay low, and interest rates won’t change much in the next 20 years – and you can afford to park some cash for that long – Series EE bonds might be your choice.
Both bonds stop earning interest after 30 years.