Americans have never been more interested in savings bonds than they are right now. With all the hype surrounding a savings bond that recently offered a guaranteed 9.62% annual interest rate for the first six months after issue, investors have plowed billions of dollars into the U.S. Treasury-backed securities. Even as the rate on new series I savings bonds has fallen to 6.89%, there are reasons to be even more excited about their use for long-term investors.

Even as one type of savings bond saw its rate drop, another enjoyed a rise in its interest rate. Yet series EE savings bonds still don't offer the value you can get from other types of investments, and it makes sense for investors to steer clear of them for now.

The Treasury currently offers two different types of savings bonds. Series I savings bonds, also known as I bonds, have an interest rate that's tied, in part, to the rate of inflation. Every six months, the Treasury looks at the change in the Consumer Price Index and uses it to set a new rate. That rate not only helps determine what newly issued I bonds will pay, but also gets incorporated into the interest-rate adjustments that I bonds go through twice a year in the 30 years before they mature.

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Source Fool.com