I-Bond Return Calculator
Combine the fixed rate and inflation rate into an I-bond composite rate, then project its value and the early-redemption penalty.
How it works
Composite = fixed + 2 · semiInflation + (fixed · semiInflation) · Value = principal · (1 + composite/2)^(2 · years)
A U.S. Series I savings bond earns a composite rate built from a fixed rate that never changes for the life of the bond and an inflation rate that resets every six months based on the CPI. The Treasury combines them with the formula above and compounds interest semiannually. Redeem within the first five years and you forfeit the last three months of interest; after five years there is no penalty, and the bond can be held up to 30 years.
Worked example
With a 1.30% fixed rate and 1.48% semiannual inflation, the composite rate is 0.0130 + 2(0.0148) + (0.0130)(0.0148) ≈ 4.28%. A $10,000 bond compounding at that rate for five years grows to roughly $12,300 — and past five years there is no early-redemption penalty.
Sources: TreasuryDirect — I bonds
Frequently asked questions
Why is the inflation rate entered as a semiannual figure?
Because the Treasury sets the I-bond inflation component from the six-month change in CPI, not an annual number. The composite formula doubles it, which is why the "annualized" inflation portion is roughly twice the semiannual rate you enter.
Can an I-bond lose value?
No. The composite rate is floored at 0%, so even in deflation the bond never earns negative interest and its redemption value never drops. The fixed rate also cannot fall below zero.
What is the early-redemption penalty?
If you cash out before five years, you give up the last three months of interest. You cannot redeem at all in the first 12 months. After five years there is no penalty, and interest keeps accruing for up to 30 years.
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Educational estimate, not investment or tax advice.