May I Bond Rate
The semiannual inflation change period for the May I bond is now complete, meaning we can calculate when the May 2011 rate will be based on different fixed rates.
The CPI-U change increased by 2.3% from September 2010’s value of 218.439 and March 2011’s value of 223.467. Based on this, the composite rate would be between 4.60% and 6.03%, depending on the announced fixed rate.
| Theoretical Fixed Rate | Composite Rate |
| 0.00% | 4.60% |
| 0.10% | 4.70% |
| 0.20% | 4.80% |
| 0.30% | 4.91% |
| 0.40% | 5.01% |
| 0.50% | 5.11% |
| 0.60% | 5.21% |
| 0.70% | 5.32% |
| 0.80% | 5.42% |
| 0.90% | 5.52% |
| 1.00% | 5.62% |
| 1.10% | 5.62% |
| 1.20% | 5.83% |
| 1.30% | 5.93% |
| 1.40% | 6.03% |
Buying an I bond before May 1st will result in a 0.74% composite rate for 6 months, and then a 4.60% for the next 6 month period beginning in October.
Since the CPI-U change alone results in a very attractive rate in today’s environment, I doubt the fixed rate will be higher in May than it is today.
