Individual - Savings Bond Wizard
Currently, with the Bureau of Labor Statistics artificial CPI rate being so low, the formula keeps the interest rates low, and the only saving grace for I Bond holders, was the base rate of the time the bonds were issued.
Our 2001 and 2003 bonds are paying 6.01% and 4.38% respectively.
In 2008, when the CPI was higher, the same bonds were paying 8.31% and 6.43%
The FAQ for I Bonds is here:
Individual - I Savings Bonds
Here's the formula for calculating the interest rate.
Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
The Fixed rate is determined by the Secretary of the Treasury. The current rate has been Zero (0%) for the past two years. When we bought in 2001, the fixed rate was 3.4%.
If the CPI should rise to 4%, our composite rate would be
3.4% +8.0% +1.4% total 12.8%
At the time we were buying, one person was allowed a total of $30,000... today, $15,000. (per year)
We're going to hold on, and hope that the BLS will some day be honest about "REAL" inflation rates. (subject for another thread)