I Bonds Bought from November 1998 through April 1999 to Earn 3.3% Over and Above Inflation


November 2, 1998

Series I, inflation-indexed savings bonds purchased from November 1998 through April 1999 will earn a 3.3 percent fixed rate of return over and above inflation. The 3.3 percent fixed rate applies for the 30-year life of I Bonds purchased during this six-month period.

Treasury's new inflation-indexed I Bonds are designed to offer all Americans a way to save that protects the purchasing power of their investment by assuring them a real rate of return over and above inflation. I Bonds have features that make them attractive to many investors. They are sold at face value in denominations of $50, $75, $100, $500, $1,000, and $5,000 and earn interest for as long as 30 years. Two new denominations, $200 and $10,000, will go on sale in May 1999. I Bond earnings are added every month and interest is compounded semiannually. They are State and local income tax exempt, and Federal income tax on I Bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years. Investors cashing I Bonds before five years are subject to a 3-month earnings penalty.


The earnings rate for I Bonds is a combination of a fixed rate, which will apply for the life of the bond, and the inflation rate. The 5.05 percent earnings rate for I Bonds bought from November 1998 through April 1999 will apply for the first six months after their issue. The earnings rate combines the 3.30 percent fixed rate of return with the 1.72 percent annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 162.2 to 163.6 from March to September 1998, a six-month increase of 0.86 percent.


Earnings rates and actual yields for I Bonds are shown in the I Bond Earnings Report.


Get the latest information about I Bonds and Series EE bonds at Public Debt's savings bond website at www.savingsbonds.gov. Download the Savings Bond Wizard, a free easy to use program that lets you keep track of all your savings bonds and calculate the value of your portfolio. The latest United States Savings Bonds/Notes Earnings Report, containing rate and yield information for Series E, EE and I bonds along with Savings Notes, is also available at the website or by mail. Send a postcard asking for the “Earnings Report” to the Bureau of the Public Debt, 200 Third Street, Parkersburg, WV 26106-1328.