Trouble understanding I Bond interest calculation

[Tom52]

I have a fair number of I Bonds purchased more or less yearly between 2002 to 2009. Recently there was a discussion about I bonds and I took away from it that starting in May 2011 I bonds were paying 4.6% inflation adjustment May thru November.

Disregarding the fixed interest rate portion on the majority of my older I bonds, I am under the impression that I should see a minimum monthly increase in value of my I bonds over this 6 month period = 4.6% / 12 months X total face value of I bonds.

What is wrong with this calculation? What Treasury Direct shows is much less than this. Additionally, these same I Bonds were earning in excess of $700 per month two years ago, and for the month of July 2011 I received only $236.80 compared to $420.00 in July 2010. I thought I Bonds were paying zero for inflation adjustment last year, but Treasurey Direct calculated more monthly interest last year than this year, (I assumed totally on the fixed % of my older I Bonds).

I have tried to get a handle on the calculation of interest on the Treasury Direct web site but can't really get an understanding why the monthly calculated interest continues to decline.

What am I missing?

 

[FIREd]

Have you tried the i-bond calculator on the treasury direct website?

Calculate the Value of Your Paper Savings Bond(s)

It will tell you what your bonds are currently earning.

 

[thefinancebuff]

What am I missing?

Each bond has its own six-month cycles depending on the month it was issued. The 4.6% rate is in effect May through October for bonds issued in May. For bonds issued in July, the cycle is July through Dec. and Jan. through June. July isn't over yet. You are looking at the previous cycle for July bonds. Inflation was lower in the previous cycle.