Calculate the actual earnings rate based on fixed and inflation rates.
The rate that stays the same for the life of the bond (assigned at purchase).
The 6-month variable rate announced every May and November.
Fixed Rate Component:0.00%
Inflation Rate Component (x2):0.00%
Combined Component (Fixed x Inflation):0.00%
Total Composite Rate (APY):0.00%
Calculation Logic Applied:
Rate = Fixed + (2 x Inflation) + (Fixed x Inflation)
function calculateIBondRate() {
var fixedInput = document.getElementById('fixedRate').value;
var inflationInput = document.getElementById('inflationRate').value;
// Basic validation
if (fixedInput === "" || inflationInput === "") {
alert("Please enter both the Fixed Rate and the Semiannual Inflation Rate.");
return;
}
// Parse values (input as percentage, convert to decimal for math)
var fixedRate = parseFloat(fixedInput) / 100;
var inflationRate = parseFloat(inflationInput) / 100;
if (isNaN(fixedRate) || isNaN(inflationRate)) {
alert("Please enter valid numerical values.");
return;
}
// The Treasury Formula: Composite rate = [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
var part1 = fixedRate;
var part2 = 2 * inflationRate;
var part3 = fixedRate * inflationRate;
var compositeRaw = part1 + part2 + part3;
// Formatting for display
// Convert decimals back to percentages for display components
var displayFixed = (part1 * 100).toFixed(2) + "%";
var displayInflation2x = (part2 * 100).toFixed(2) + "%";
// The cross product is usually very small, show 4 decimals for clarity
var displayCombined = (part3 * 100).toFixed(4) + "%";
// Final Composite Rate is generally rounded to 2 decimal places in % form (e.g., 9.62%)
// Treasury logic: Round to nearest one-hundredth of one percent.
var compositePercent = Math.round(compositeRaw * 10000) / 100;
var displayComposite = compositePercent.toFixed(2) + "%";
// Update DOM
document.getElementById('resFixed').innerHTML = displayFixed;
document.getElementById('resInflation').innerHTML = displayInflation2x + " (2 * " + inflationInput + "%)";
document.getElementById('resCombined').innerHTML = displayCombined;
document.getElementById('resComposite').innerHTML = displayComposite;
// Show formula breakdown text
var formulaText = compositePercent + "% = " + fixedInput + "% + (2 x " + inflationInput + "%) + (" + fixedInput + "% x " + inflationInput + "%)";
document.getElementById('formulaBreakdown').innerHTML = formulaText;
document.getElementById('resultContainer').style.display = "block";
}
Understanding How I Bond Rates Are Calculated
Series I Savings Bonds (I bonds) are a unique investment vehicle offered by the U.S. Treasury designed to protect savings from inflation. Unlike standard savings accounts or fixed-rate CDs, the interest rate on an I bond is not a single static number. Instead, it is a composite rate derived from two distinct components.
The Two Components of the I Bond Rate
To calculate the actual earnings rate (APY) of an I bond, you must understand the two variables involved:
The Fixed Rate: This rate is announced by the Treasury every May and November. Once you purchase a bond, this rate remains constant for the entire 30-year life of that specific bond. If you buy a bond with a 1.30% fixed rate, it will always earn that 1.30% base.
The Inflation Rate (Variable): This rate changes every six months. It is based on changes in the non-seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U). This component ensures your savings grow fast enough to keep up with the cost of living.
The Official Treasury Formula
Many investors mistakenly believe you simply add the fixed rate to the inflation rate. However, the actual Treasury Department formula includes a "cross-product" component that slightly boosts the return. The mathematical formula is:
Note: The "Inflation Rate" usually published in headlines is often the annualized inflation estimate, but the calculation uses the semiannual rate. If the CPI-U increased by 2.0% over six months, the semiannual rate is 2.0%. The formula multiplies this by 2 to annualize it, and adds the small composite product.
Example Calculation
Let's verify a calculation manually. Suppose you own an I Bond with a Fixed Rate of 0.50% and the Treasury announces a Semiannual Inflation Rate of 1.75%.
Convert percentages to decimals: Fixed = 0.0050, Inflation = 0.0175.
In this example, the composite rate for that six-month period would be 4.01%.
Why Does the Rate Change?
While your fixed rate never changes, the composite rate for your bond changes every six months from the date of issue. The Treasury announces new rates on:
May 1st: Based on CPI data from September through March.
November 1st: Based on CPI data from March through September.
Using the calculator above allows you to predict your future composite rate as soon as new CPI data is released, or to verify the current earning rate of older bonds with different fixed rates.