What Factors Affect Savings Bonds Rates?


Quick Answer

The Department of Treasury announces the interest rate for newly issued EE savings bonds each May 1 and November 1, states Treasury Direct. Savings bonds are low-risk financial products that earn a fixed interest rate for up to 30 years and are guaranteed by the U.S. government. However, the Treasury Department reserves the right to change the rate after 20 years. For bonds purchased between May 1, 2015 and Oct. 31, 2015, the interest rate is 0.30 percent.

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What Factors Affect Savings Bonds Rates?
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Full Answer

Older savings bonds bought prior to April 2005 earn a variable interest rate that changes every six months. The Treasury department announces the rate each May 1 and November 1. The rate applies for the next six months. The interest is compounded twice a year which means the interest a bond earned in the previous six months is added to the main value. Over the next six months, the savings bond earns interest on the new principal value, states Treasury Direct.

For example, the annual rate for savings bonds with issue dates from May 1997 through April 2005 is 1.35 percent. For bonds with issue dates between May 1995 and April 1997, the interest rate is 1.27 percent. These rates apply to the six-month period that starts May 1, 2015 and ends October 1, 2015. Some bonds issued between January 1980 and April 1995 have stopped paying interest, notes Treasury Direct.

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