Series I Bond Rate Calculator
Calculation Results
Treasury Formula Applied:
Understanding the Series I Bond Rate Formula
Series I Savings Bonds (I Bonds) are a unique investment vehicle issued by the U.S. Treasury designed to protect your savings from inflation. Unlike standard savings accounts or CDs, the interest rate on an I Bond is a "Composite Rate" derived from two distinct components: a fixed rate and a variable inflation rate.
The Composite Rate Equation
The actual annual earnings rate of your I Bond is calculated using a specific formula mandated by the Treasury. It is not simply the sum of the fixed and inflation rates. The formula combines them to ensure your purchasing power is truly maintained.
Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]
- Fixed Rate: Established at the time of purchase and remains constant for the entire 30-year life of the bond.
- Semiannual Inflation Rate: Updated every six months (in May and November) based on the Consumer Price Index for All Urban Consumers (CPI-U).
How Interest Accrues
Interest on I Bonds is earned monthly and compounded semiannually. This means that every six months, the interest earned in the previous period is added to the bond's principal value, and future interest is calculated on this new, higher amount.
Note: If you redeem an I Bond before it is five years old, you will forfeit the last three months of interest. This calculator shows the gross interest earned before any potential penalty.
Why the "Fixed Rate x Inflation Rate" Part Matters
You might notice the third part of the formula involves multiplying the rates. While this number is often small, it represents the mathematical adjustment required to ensure the fixed rate grows by inflation as well. In times of high inflation, this component can add a measurable amount to your total return.
Using This Calculator
This tool allows you to input the current Fixed Rate and the Semiannual Inflation Rate announced by TreasuryDirect. It computes the annualized composite rate that will apply to your bond for the next six-month period. By entering your purchase amount, you can also see an estimate of the interest that will generate over that specific six-month window.