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    Calculates locally in your browser · Series I savings bonds
    Savings / I bonds

    Series I bond value

    An I bond pays a composite rate: a fixed rate set at issue, plus twice the semiannual inflation rate, plus a small cross term that most reproductions miss. This computes the composite rate, accrues it monthly with semiannual compounding, and applies the three-month penalty that applies if you redeem inside five years.

    Fixed rate1.30%PenaltyNoneRedeemableYes
    Value now
    $12,382.21
    after $0.00 of forfeited interest
    Composite rate
    4.319%
    fixed 1.30% + 2 × 1.50% + cross term
    Interest earned
    $2,382.21
    over 5.0 years, net of the penalty
    Effective annual
    4.366%
    the composite rate compounded semiannually
    Accrual and redemption
    Interest is credited monthly and compounded every six months; the penalty only exists inside five years.
    5.0 years
    Accrual and redemption
    LineValueNote
    Purchase amount$10,000limit $10,000 per person per year
    Fixed rate1.30%set at issue, never changes
    Semiannual inflation1.50%CPI-U change over six months
    Cross term0.0195%fixed × inflation — small but real
    Composite rate4.319%applied semiannually
    Effective annual4.366%(1 + c/2)² − 1
    Value before penalty$12,382.21at 60 months
    Early-redemption penalty−$0.00none after five years
    Net value$12,382.21what the Treasury pays
    Interest earned$2,382.21net of the penalty
    Value at 10 years$15,332no penalty applies
    Value at 30 years$36,040the bond stops earning
    Real return1.30%the fixed rate is the real component

    The fixed rate is the real return: the inflation component is designed to track CPI, so the purchasing power of the bond grows at roughly the fixed rate. A 1.3% fixed rate is a 1.3% real return, guaranteed for thirty years.

    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    Value against time
    Compounded semiannually, so the curve is a staircase smoothed by the monthly credit.
    Value against time$0$2.8k$5.5k$8.3k$11.1k$13.9k1122334455Value
    Fixed against inflation
    How much of the composite rate is the guaranteed real return and how much is compensation for inflation.
    Fixed against inflation0.0000.7081.422.122.833.541.30FixedFixed3.00Inflation ×2Inflation ×20.019Cross termCross termPercent
    Canonical equations
    The exact relationships implemented by this engine.

    c = f + 2π + f·π · Treasury formula, 31 CFR Part 360.

    (1 + c/2)² − 1 · Semiannual compounding.

    P(1 + c/2)^(m/6) · Monthly credit within each half-year.

    V(m) − V(m − 3) · Three months of interest, inside five years.

    finance methodology

    A clear path from inputs to results.

    An I bond pays a composite rate: a fixed rate set at issue, plus twice the semiannual inflation rate, plus a small cross term that most reproductions miss. This computes the composite rate, accrues it monthly with semiannual compounding, and applies the three-month penalty that applies inside five years.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Enter the amount you bought and the fixed rate at issue.
    2. Set the semiannual inflation assumption — the rate that applies to each six-month period.
    3. Choose how long you hold it.
    4. Read the composite rate, the value and any early-redemption penalty.

    The formula

    c=f+2π+fπ  ;  Vm=P(1+c2)m/6c = f + 2\pi + f\pi \;;\; V_m = P\left(1 + \frac{c}{2}\right)^{m/6}

    Reference: Treasury formula under 31 CFR Part 360; rates published by TreasuryDirect each May and November.

    Worked example

    $10,000 held for five years at a 1.3% fixed rate

    Inputs
    • $10,000 purchased with a 1.3% fixed rate.
    • Semiannual inflation of 1.5%.
    • Held for 60 months.
    Calculation path
    1. 1

      The composite rate is 1.3% + 2 × 1.5% + 1.3% × 1.5% = 4.319%.

    2. 2

      That compounds semiannually to an effective annual rate of 4.366%.

    3. 3

      Over 60 months the value is $10,000 × (1 + 0.04319/2)¹⁰ = $12,382.21.

    4. 4

      At exactly 60 months the three-month penalty no longer applies, so the full value is paid.

    5. 5

      Interest earned is $2,382.21.

    Result

    4.319% composite · $12,382.21 after five years · no penalty.

    Interpreting the result

    The fixed rate is the real return. The inflation component is designed to track CPI, so the purchasing power of the bond grows at roughly the fixed rate for as long as you hold it — which makes the fixed rate the number to compare against a TIPS real yield, not against a nominal savings rate.

    Assumptions & limitations

    • The inflation component is held constant, which is a projection rather than a forecast.
    • Interest accrues monthly and compounds at each six-month boundary.
    • Redemption is not permitted in the first twelve months; three months of interest is forfeited before five years.
    • The bond stops earning at thirty years.
    • Federal tax on the interest is deferred until redemption; state and local tax is not levied.

    Frequently asked questions

    Why is the composite rate not just fixed plus inflation?

    Because the Treasury formula adds the cross term f × π as well. It is small — 0.02% at these rates — but it is the reason a hand calculation that simply adds the two numbers comes out a few basis points low.

    How much can I buy?

    $10,000 per person per calendar year electronically through TreasuryDirect, plus up to $5,000 in paper bonds from a tax refund. A married couple with a trust can buy more, because each entity has its own limit.

    What happens if inflation is negative?

    The composite rate floors at zero rather than going negative, so the bond never loses nominal value. The fixed rate keeps accruing, which is why a bond bought when fixed rates were high remains attractive even through a deflationary period.

    When can I redeem?

    After twelve months. Between one and five years you forfeit the last three months of interest, which is roughly a quarter of a year's earnings; after five years there is no penalty at all.

    Are I bonds a good inflation hedge?

    They track CPI exactly, with no duration risk and a deflation floor, which makes them one of the cleanest inflation hedges available to a retail investor. The cost is the purchase limit and the fixed rate, which is often modest.

    Methodology last reviewed 2026-10-21. Results are informational and not financial or engineering advice — see our disclaimer.