How is interest calculated?

  1. Law
  2. CFR 31
  3. Money and Finance: Treasury
  4. Regulations Relating to Money and Finance
  5. Fiscal Service, Department of the Treasury
  6. Bureau of the Fiscal Service
  7. Offering of United States Savings Bonds, Series I
  8. General Information
  9. How is interest calculated?

Checkout our iOS App for a better way to browser and research.

§ 359.19 How is interest calculated?

We base all calculations of interest on a $25 unit. We use the value of this unit to determine the value of bonds in higher denominations. The effect of rounding off the value of the $25 unit increases at higher denominations. This can work to your slight advantage or disadvantage, depending on whether we round the value up or down.[3]

Footnotes - 359.19

[3] For example: A composite rate of 2.57% will result in a newly purchased $25 unit increasing in value after six months to $25.32, when rounded to the nearest cent. Thus, a $5,000 bond purchased at the same time as the $25 unit will be worth $5,064 after six months ([$5,000 divided by $25] × $25.32 = $5,064.) In contrast, if it applied directly to a $5,000 bond, the rate would render a value of $5,064.25 after six months, a difference of 25 cents. (This example does not include any discussion of the three-month interest penalty that applies if you redeem a bond less than five years after its issue date.)


Download our app to see the most-to-date content.