Calculate I Bonds

Series I Savings Bond Composite Rate Calculator

Electronic limit is $10,000 per calendar year.

The rate set by the Treasury that stays with the bond for 30 years.

The variable rate based on the Consumer Price Index (CPI-U).

Calculated Estimates

Composite Annual Rate: 0.00%

Earnings after 6 months: $0.00

Total Bond Value (at 6 months): $0.00

Note: If you cash out before 5 years, you lose the last 3 months of interest.

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How Series I Bonds Interest is Calculated

Series I savings bonds are non-marketable interest-bearing U.S. government savings bonds. They are specifically designed to offer investors a way to protect their purchasing power against inflation. Unlike Treasury Inflation-Protected Securities (TIPS), I Bonds do not fluctuate in principal value; instead, the interest rate itself adjusts.

The Composite Rate Formula

The total interest you earn on an I Bond is known as the Composite Rate. This rate is a combination of two distinct components: a fixed rate and a semiannual inflation rate. The U.S. Treasury uses a specific formula to combine these, which prevents "double-counting" and accounts for the compounding effect.

Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]

Understanding the Components

• Fixed Rate: This rate is announced every May 1 and November 1. Once you purchase a bond, this rate remains constant for the entire 30-year life of the bond.
• Semiannual Inflation Rate: This rate is updated every six months based on changes in the Consumer Price Index for all Urban Consumers (CPI-U). Because it changes, your composite earnings will shift twice a year.
• The Floor: The composite rate can never go below zero, even during periods of deflation.

Realistic Example Calculation

Imagine you invest $5,000. The Treasury announces a 1.30% fixed rate and the semiannual inflation rate is 1.96%.

1. Convert percentages to decimals: Fixed = 0.013, Inflation = 0.0196.
2. Apply formula: 0.013 + (2 * 0.0196) + (0.013 * 0.0196).
3. Calculation: 0.013 + 0.0392 + 0.0002548 = 0.0524548.
4. Annual Composite Rate: 5.25% (rounded).

Important Rules to Remember

Before buying I Bonds, consider the liquidity constraints. You cannot redeem I Bonds for the first 12 months. Furthermore, if you redeem them before holding them for 5 years, you forfeit the last three months of interest. After 5 years, there is no penalty, and the bonds continue to earn interest for up to 30 years.

function calculateIBondResults() { var principal = parseFloat(document.getElementById('investmentAmount').value); var fixedRatePct = parseFloat(document.getElementById('fixedRate').value); var inflationRatePct = parseFloat(document.getElementById('inflationRate').value); if (isNaN(principal) || isNaN(fixedRatePct) || isNaN(inflationRatePct)) { alert("Please enter valid numerical values for all fields."); return; } // Convert percentages to decimals var f = fixedRatePct / 100; var i = inflationRatePct / 100; // Composite Rate Formula: [Fixed + (2 x Inflation) + (Fixed x Inflation)] var compositeRate = f + (2 * i) + (f * i); // Interest for 6 months (semiannual period) // Bonds compound semiannually. The composite rate is an annual figure. // Half-year earnings = Principal * (CompositeRate / 2) var earnings = principal * (compositeRate / 2); var totalValue = principal + earnings; // Display results document.getElementById('compositeRateResult').innerText = (compositeRate * 100).toFixed(2); document.getElementById('earningsResult').innerText = earnings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('totalValueResult').innerText = totalValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('ibond-results').style.display = 'block'; }