Determine the growth of your Series I or Series EE savings bonds.
Series I Bond (Inflation Protected)
Series EE Bond (Fixed Rate)
Composite Annual Rate:0.00%
Total Interest Earned:$0.00%
Early Withdrawal Penalty (3-mo):$0.00
Estimated Current Value:$0.00
How Savings Bond Rates Are Calculated
Savings bonds, particularly Series I bonds, use a unique method to determine their earnings. Unlike a standard bank account, the interest rate on an I Bond is a composite rate. This rate is composed of two parts: a fixed rate that stays the same for the life of the bond, and a semiannual inflation rate that changes every six months based on the Consumer Price Index (CPI-U).
The formula used by the U.S. Treasury to calculate the composite rate is:
Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]
Key Features of Series I and EE Bonds
Series I Bonds: Designed to protect your purchasing power from inflation. The interest is added to the bond monthly and compounded semiannually.
Series EE Bonds: These carry a fixed interest rate. However, the U.S. Treasury guarantees that an EE bond will double in value if held for 20 years, effectively providing an annual return of about 3.5% if held for exactly that duration.
The 5-Year Rule: If you cash in a bond before holding it for at least 5 years, you forfeit the last 3 months of interest as a penalty.
Taxation: Interest earned on these bonds is exempt from state and local taxes, but subject to federal income tax (which can be deferred until the bond is cashed or reaches maturity).
Practical Example
If you purchase a $1,000 Series I Bond with a 1.30% fixed rate and the current semiannual inflation rate is 1.98%:
The calculation would be: 0.0130 + (2 x 0.0198) + (0.0130 x 0.0198) = 0.0528 or 5.28%.
After 5 years, your $1,000 would grow significantly due to semiannual compounding. If you cashed out at year 4, you would lose the interest earned in the most recent 3 months.
function toggleInflationInput() {
var type = document.getElementById('bondType').value;
var group = document.getElementById('inflationGroup');
if (type === 'EE') {
group.style.opacity = '0.5';
document.getElementById('inflationRate').disabled = true;
} else {
group.style.opacity = '1';
document.getElementById('inflationRate').disabled = false;
}
}
function calculateSavingsBond() {
var type = document.getElementById('bondType').value;
var principal = parseFloat(document.getElementById('purchasePrice').value);
var fixedRate = parseFloat(document.getElementById('fixedRate').value) / 100;
var inflationRate = parseFloat(document.getElementById('inflationRate').value) / 100;
var years = parseFloat(document.getElementById('yearsHeld').value);
if (isNaN(principal) || isNaN(fixedRate) || isNaN(years)) {
alert('Please enter valid numerical values.');
return;
}
var compositeRate;
if (type === 'I') {
// Treasury Formula for I Bonds: Fixed + (2*Semi) + (Fixed*Semi)
compositeRate = fixedRate + (2 * inflationRate) + (fixedRate * inflationRate);
} else {
// EE Bonds use the fixed rate
compositeRate = fixedRate;
}
// Compounded semiannually: A = P(1 + r/n)^(nt)
var n = 2; // Semiannual
var totalValue = principal * Math.pow((1 + (compositeRate / n)), (n * years));
// Calculate 3-month penalty if held < 5 years
var penalty = 0;
if (years < 5) {
// Roughly 3 months of interest at the current rate
// Simplified as (Total Value * (Rate/4))
penalty = totalValue * (compositeRate / 4);
}
var finalValue = totalValue – penalty;
var totalInterest = finalValue – principal;
// Display results
document.getElementById('resCompositeRate').innerHTML = (compositeRate * 100).toFixed(2) + '%';
document.getElementById('resInterest').innerHTML = '$' + totalInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resPenalty').innerHTML = '$' + penalty.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalValue').innerHTML = '$' + finalValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('bondResult').style.display = 'block';
}