Series I vs Series EE
It can be confusing when trying to decipher the difference between
Series EE savings bonds and their Series I counterparts. Both bonds are issued
by the Treasury Department and Backed by the
The tax benefits of Series I Bonds are virtually the same as the tax benefits of Series EE Bonds as well. The interest earned on both is subject to federal income tax with some educational exclusions.
I Bond vs EE Bond: Differences
The difference is in the series bond value and how the interest is calculated. The Series I Bonds were created to protect against inflation. The interest rate paid by these bonds includes a part that is fixed for the life of the bond. The other part follows the rate of inflation as determined by the Consumer Price Index. This interest rate is calculated by the Treasury every six months.
Series I vs Series EE: Interest Rates
Series EE Savings Bonds bought between May 1997 and April 2005 have a variable interest rate that is reset every six months. The rate is set as 90 percent of the average annualized yield of the five-year Treasury note over the preceding six months. All Series EE Savings Bonds issued after this date has a fixed rate of interest.
Both sets of bonds have a minimum holding one year period and an early redemption penalty if the bonds are redeemed within the first five years of ownership.
Since I bonds were introduced in 1998, they have outperformed Series EE bonds.
Series I Bond vs Series EE Bond Financial Planning Help
If you have any questions about the difference between these two bonds and which one may be right for you, please consult with an experience bonds savings financial professional.