Current I Bond Interest Calculator

I Bond Interest Formula:

\[ Interest = P \times composite \] \[ composite = fixed + 2 \times inflation + fixed \times inflation \]

Composite Rate:

Interest Amount:

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1. What is the I Bond Interest Calculator?

The I Bond Interest Calculator calculates the current interest earned on Series I Savings Bonds based on the composite rate formula. I Bonds are U.S. government savings bonds that earn interest based on both a fixed rate and an inflation rate.

2. How Does the Calculator Work?

The calculator uses the I Bond composite rate formula:

\[ Interest = P \times composite \] \[ composite = fixed + 2 \times inflation + fixed \times inflation \]

Where:

$ P $ — Purchase amount in USD
$ composite $ — Composite interest rate (decimal)
$ fixed $ — Fixed rate component (decimal)
$ inflation $ — Inflation rate component (decimal)

Explanation: The composite rate combines the fixed rate that applies for the life of the bond with the current inflation rate, which is adjusted every six months.

3. Importance of I Bond Interest Calculation

Details: Accurate I Bond interest calculation helps investors understand their potential returns, especially important for inflation-protected savings and retirement planning. I Bonds provide protection against inflation while offering a guaranteed minimum return.

4. Using the Calculator

Tips: Enter the purchase amount in USD, fixed rate as a decimal (e.g., 0.025 for 2.5%), and inflation rate as a decimal. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are the current fixed and inflation rates for I Bonds?
A: Rates are announced by the Treasury Department every May and November. Check TreasuryDirect.gov for current rates.

Q2: How often is interest compounded on I Bonds?
A: I Bonds earn interest monthly and compound semiannually. The composite rate changes every six months.

Q3: What is the minimum investment for I Bonds?
A: The minimum purchase is $25 for electronic bonds or $50 for paper bonds.

Q4: Are there any restrictions on I Bonds?
A: I Bonds must be held for at least one year, and redeeming within five years results in losing the last three months of interest.

Q5: How are I Bonds taxed?
A: Interest is exempt from state and local taxes, but subject to federal income tax. Tax can be deferred until redemption.