Series I Bond Rate Calculator

Series I Bonds are inflation-pegged bonds offered by the Treasury. The interest rate you earn is a calculation that takes into account the fixed rate of your particular bond, a rate set every 6 months and follows your bond for the rest of its life, and an inflation rate that changes every six months to correspond with the CPI-U inflation rate. Here is a list of the Series I bond’s historic rates.

The equation itself isn’t particularly complicated and is:
Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]

Using it to calculate the latest inflation rate data (announced November 1st, 2008), we calculate bonds bought in this period to be earning an APY of 5.64%:

Fixed rate = 0.70% (this fixed portion remains the same until you redeem the bond)
Semiannual inflation rate = 2.46% (in May 2009, this number will change)

Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
Composite rate = [0.0070 + (2 x 0.0246) + (0.0070 x 0.0246)]
Composite rate = [0.0070 + 0.0492 + 0.0001722]
Composite rate = [0.0563722]
Composite rate = 0.0564
Composite rate = 5.64%

Series I Bond Rate Calculator

Here’s a handy calculator to help you calculate the yield:

(photo by allyrose18)