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Series I Inflation-beater Savings Bonds Debut

American Forces Press Service

WASHINGTON, D.C., Sept. 11, 1998 – The U.S. Treasury's Series I savings bonds made their debut Sept. 1 and may appeal to savers who are trying to keep up with inflation.

Treasury representative Mack Stamper, a specialist in DoD bond programs, said the new Series I bonds sell at face value in eight denominations from $50 to $10,000. Their special features are a fixed base interest rate and a supplemental rate adjusted for inflation.

Bonds sold Sept. 1 carried a 3.4 percent base rate and 1.26 percent supplemental rate for total semiannual earnings of 4.66 percent, he said. Treasury announces earnings rates for Series I and EE bonds on May 1 and Nov. 1.

The base rate in effect at the time of purchase is guaranteed for the Series I bond's 30-year maximum life. The supplemental inflation rate is good only until the next adjustment, Stamper said. Earnings are credited monthly and compounded semiannually.

Treasury uses the Bureau of Labor Statistics' Consumer Price Index-Urban to set Series I inflation adjustments, he said.

The familiar Series EE bonds sell for half their face value and currently earn more -- 5.06 percent, but the rate has floated with no guaranteed minimum since May 1995. The EE semiannual earnings rate is 90 percent that of prevailing five-year U.S. Treasury bonds.

Series I bonds at this time are sold only over the counter and through automatic checking account allotments at participating financial institutions, Stamper said. A payroll savings plan is scheduled to start later this year and eventually will include military members and federal civilian workers, he said.

Like their EE cousins, Series I bonds are exempt from state and local taxes and also from federal taxes if used to pay tuition and fees at qualifying schools. They are significantly different in appearance from previous issues, however.

Bonds until now customarily carried the portraits of presidents and other historical figures. Series I is the first to honor prominent, contemporary Americans and members of racial and ethnic minorities. All eight pictured are deceased.

U.S. Sen. Spark M. Matsunaga, a Japanese American, is on the $10,000 bond. African-American opera star Marian Anderson graces the $5,000 bond. Nobel physicist Albert Einstein is on the $1,000 denomination. Gen. George C. Marshall is on the $500.

Chief Joseph, leader of the Nez Perce Indian tribe in the late 1800s, appears on the $200 bond. African-American civil rights leader the Rev. Martin Luther King Jr. is on the $100 bond. Hispanic veterans' rights advocate Dr. Hector Garcia, founder of the American G.I. Forum, is on the $75 bond. Author Helen Keller, advocate of Americans with disabilities, is on the $50.

For more information about Series I and other U.S. Savings Bonds, interest earning rates, investment tips and tax rules, point your Internet browser to www.publicdebt.treas.gov or www.savingsbonds.gov, or write to: U.S. Treasury Bureau of the Public Debt Savings Bond Operations Parkersburg, WV 26106-1328.

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