I made the right move with the I-Bond for my niece. The Treasury Department announced today that the I-Bond rate from November to April will be 6.73%. This rate includes a fixed rate of 1.0% (this is down from 1.2% over the last six months) and an inflation adjusted rate of 5.73%. Even though the fixed rate of the bond was lowered, the rate still is well above what ING (3.4%) and Emigrant Direct (4.0%) are paying.
I bought the I-Bond with the thought that the fixed rate would most likely be lower than the fixed rate for the last six months. I just couldn’t see the Treasury Department offering a 7%+ return which proved to be correct. This should help her savings out a bit since that money would have been earning virtually nothing in a Japanese bank.
If you haven’t purchased an I-Bond yet, but are considering doing so, you still have some time to think about it since the best time to do so is toward the end of November — this will allow you to earn interest in your regular banking account all through November + interest for the I-Bond for all of November (the I-Bond pays a full month7s interest no matter when during the month it’s purchased).