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# 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 [3].

This post was updated to reflect the November 1st, 2009 interest rate changes.

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, 2009), we calculate bonds bought in this period to be earning an APY of 3.36%:

Fixed rate = 0.30% (this fixed portion remains the same until you redeem the bond)
Semiannual inflation rate = 1.53% (in May 2010, this number will change)

Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
Composite rate = [0.0030 + (2 x 0.0153) + (0.0030 x 0.0153)]
Composite rate = [0.0030 + 0.0306 + 0.0000459]
Composite rate = [0.0336459]
Composite rate = 0.0336
Composite rate = 3.36%