<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by HawaiiBound:
$1000 used to buy an I bond in June of 2002 will now be worth $1028 so in the simplest of terms the $1000 has earned $28 or 2.8% interest since last June.... The 4.66% current rate which when into effect in May is therefore the lowest rate that would have been paid during the life of the bond....</font>
- The rate in June '02 was 2.57%, so your bond began life earning less than you remember.
- The 4.66% rate from May '03 applies only to bonds purchased since then. The current rate for your (older) bonds is actually higher: 5.58%.
- Since you bought your bonds in June '02, the 5.58% rate went into effect this June, not May.
- The current rate is irrelevant anyway, since all interest earned at that rate is lost to the early redemption penalty built into the calculation.
In the 13 months since the bond was issued, it earned 2.57% for the first six months, 4.48% for the next four, and 0% for the final three (that's the early redemption penalty). So $28 is just what's expected.
--ss
[This message has been edited by ss (edited 07-15-2003).]