How I bond interest accrues
I bond interest accrues monthly and compounds every six months. Your bond earns its composite rate for a six-month window, then that interest is added to principal and the next window earns on the larger balance. Crucially, each bond’s rate window rolls from its own issue month, not the calendar May/November reset. For the first 5 years, the value you see has the last 3 months of interest withheld (the early-redemption penalty), so a brand-new bond’s value can look flat for its first 3 months. The current composite rate for new bonds is 4.26%.
Source: TreasuryDirect. Data as of May 2026.
The accrual rules
| Rule | Detail |
|---|---|
| Accrual frequency | Monthly — interest is added on the first of each month. |
| Compounding | Semiannually — every 6 months interest is added to principal. |
| Rate window | Each bond's rate changes every 6 months from its OWN issue month, not on May/Nov. |
| First 12 months | Locked — value still grows but you cannot redeem. |
| Months 13-59 | Redeemable, but the most recent 3 months of interest are withheld. |
| 3-month lag | Until 5 years, your displayed value omits the last 3 months of interest. |
Source: TreasuryDirect. Data as of May 2026.
A worked example
Suppose you buy a $1,000 I bond. For its first 6 months it earns the composite rate at issue; that interest is posted monthly but only “locks in” (compounds) at the 6-month mark, when it is added to your $1,000. The next 6 months earn the next composite rate on the new, higher balance. This continues for up to 30 years. Because of the 3-month penalty before year 5, TreasuryDirect deliberately shows a value that excludes the most recent 3 months of interest until you cross the 5-year line — then your balance visibly jumps. Our value calculator models this; for the exact penny figure use TreasuryDirect.
Frequently asked questions
How does I bond interest accrue?
Interest accrues monthly and compounds every six months. Your bond earns the composite rate for six months, then that interest is added to principal and the next six months earn on the larger balance. The rate window rolls from your bond's own issue month — not the calendar May/November dates.
Why hasn't my I bond's value gone up for 3 months?
For the first 5 years, TreasuryDirect displays your value with the last 3 months of interest withheld, because that interest would be forfeited as the early-redemption penalty if you cashed now. After 5 years the withheld interest is restored and the value jumps.
When does my specific I bond's rate change?
Every 6 months counting from your bond's issue month. A bond issued in March changes rate every March and September; a bond issued in July changes every July and January. The new rate is whatever inflation rate the Treasury had set on the preceding May 1 or November 1.
Related
Not investment or tax advice. BondValue is an independent reference, not affiliated with the U.S. Treasury or TreasuryDirect. Savings bond rates reset every 6 months (on May 1 and November 1), and any value shown here is an estimate. Verify current rates and the exact penny value of your bonds at TreasuryDirect’s official Savings Bond Calculator. Consult a qualified professional before making financial decisions.
Last updated: 2026-06-21