Series I Bonds Rates Calculator
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Projected Results
Annual Composite Rate
0.00%
Estimated Redemption Value
$0.00
Interest Earned (Gross)
$0.00
Early Withdrawal Penalty
-$0.00
Net Profit
$0.00
Understanding Series I Savings Bonds Rates
Series I Savings Bonds are a low-risk investment issued by the US Treasury designed to protect your savings from inflation. Unlike standard loans or savings accounts, the interest rate on an I Bond is a combination of two distinct rates: a fixed rate and a variable inflation rate.
1. The Composite Rate Formula
The actual rate your bond earns is called the Composite Rate. It is calculated using a specific formula set by the Treasury. While many people simply add the fixed and inflation rates together, the actual math includes a compounding factor.
Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]
Note that the inflation rate announced by the Treasury is a semiannual rate (for a 6-month period), whereas the fixed rate is an annual rate. The formula combines these to produce an annualized earnings rate.
2. Fixed Rate vs. Inflation Rate
- Fixed Rate: This rate is set when you buy the bond and never changes for the 30-year life of the bond.
- Inflation Rate: This rate is based on the Consumer Price Index for All Urban Consumers (CPI-U). It changes every six months (announced in May and November). This variable component is what protects your purchasing power.
3. Early Redemption Penalties
Series I Bonds are designed for long-term savings. While they earn interest for up to 30 years, there are strict rules regarding when you can cash them out:
- Minimum Holding Period: You must hold the bond for at least 12 months. You cannot cash it out before then.
- 5-Year Penalty Rule: If you redeem the bond before it is 5 years old, you forfeit the last 3 months of interest.
- After 5 Years: There is no penalty for redemption.
4. How Interest Compounds
Interest on Series I Bonds is earned monthly and compounded semiannually. This means that every six months, the interest earned in the previous months is added to the bond's principal value, and future interest calculations are based on this new, higher principal amount.
function calculateIBond() {
// 1. Get Inputs
var purchaseAmount = parseFloat(document.getElementById('bondPurchase').value);
var fixedRatePercent = parseFloat(document.getElementById('bondFixedRate').value);
var semiannualInflationPercent = parseFloat(document.getElementById('bondInflationRate').value);
var yearsHeld = parseFloat(document.getElementById('bondHoldingPeriod').value);
// Validation
if (isNaN(purchaseAmount) || purchaseAmount <= 0) {
alert("Please enter a valid purchase amount.");
return;
}
if (isNaN(fixedRatePercent) || fixedRatePercent < 0) {
alert("Please enter a valid fixed rate.");
return;
}
if (isNaN(semiannualInflationPercent)) {
alert("Please enter a valid inflation rate.");
return;
}
if (isNaN(yearsHeld) || yearsHeld < 0) {
alert("Please enter a valid holding period.");
return;
}
// 2. Convert percentages to decimals for calculation
var fixedRateDecimal = fixedRatePercent / 100;
var inflationRateDecimal = semiannualInflationPercent / 100;
// 3. Calculate Composite Rate
// Formula: Fixed + (2 * Semiannual) + (Fixed * Semiannual)
var compositeRateDecimal = fixedRateDecimal + (2 * inflationRateDecimal) + (fixedRateDecimal * inflationRateDecimal);
var compositeRatePercent = (compositeRateDecimal * 100).toFixed(2);
// 4. Calculate Value Growth
// Assumption: Rates remain constant for the estimation period (Standard calculator practice for I Bonds)
// I Bonds earn interest monthly, compounded semiannually.
// However, for a simplified projection over N years assuming constant rates:
var totalMonths = Math.floor(yearsHeld * 12);
var currentVal = purchaseAmount;
var monthlyInterestRate = compositeRateDecimal / 12;
// We will track interest specifically to calculate the penalty
var monthlyInterests = [];
// Simulation loop
for (var m = 0; m < totalMonths; m++) {
// Calculate interest for this month
// Note: Treasury rounds interest to nearest cent
var interest = currentVal * monthlyInterestRate;
// Interest is earned monthly but added to principal semiannually
// For simple estimation showing "Interest Earned", we accumulate value continuously
// or we simulate the 6-month compounding bucket.
// Let's use the standard compound interest formula approximation for monthly accretion
// to keep the array logic simple for the penalty calculation.
// Precise Treasury logic is complex (rounding nuances), but continuous compounding
// with 6-month steps is the best estimator.
// Let's simply compound monthly for the estimation to ensure the penalty logic works easily.
// (While technically compounded semiannually, the yield is effectively the composite rate).
currentVal += interest;
monthlyInterests.push(interest);
}
var grossValue = currentVal;
var grossInterest = grossValue – purchaseAmount;
// 5. Calculate Penalty
var penalty = 0;
var penaltyMsg = "";
var canRedeem = true;
if (yearsHeld < 1) {
penaltyMsg = "WARNING: I Bonds cannot be redeemed within the first 12 months.";
canRedeem = false;
// Technically value is 0 accessible, but we show what it grew to
} else if (yearsHeld = 3) {
var last3MonthsInterest = monthlyInterests[monthlyInterests.length – 1] +
monthlyInterests[monthlyInterests.length – 2] +
monthlyInterests[monthlyInterests.length – 3];
penalty = last3MonthsInterest;
} else {
penalty = grossInterest; // Should not happen if years >= 1
}
penaltyMsg = "Includes penalty of last 3 months interest (held < 5 years).";
document.getElementById('penaltyRow').style.display = 'flex';
} else {
penaltyMsg = "No penalty applied (held 5+ years).";
document.getElementById('penaltyRow').style.display = 'none';
}
var netValue = grossValue – penalty;
var netProfit = netValue – purchaseAmount;
// 6. Update UI
document.getElementById('displayCompositeRate').innerText = compositeRatePercent + "%";
if (!canRedeem) {
document.getElementById('displayTotalValue').innerText = "Locked";
document.getElementById('displayTotalValue').style.color = "#e74c3c";
document.getElementById('displayNetProfit').innerText = "$0.00";
} else {
document.getElementById('displayTotalValue').innerText = "$" + netValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayTotalValue').style.color = "#2c3e50";
document.getElementById('displayNetProfit').innerText = "$" + netProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
document.getElementById('displayGrossInterest').innerText = "$" + grossInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayPenalty').innerText = "-$" + penalty.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('penaltyMessage').innerText = penaltyMsg;
}
// Run once on load to populate defaults
window.onload = function() {
calculateIBond();
}