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Electronic Code of Federal Regulations

e-CFR data is current as of June 2, 2020

Title 31Subtitle BChapter IISubchapter APart 359Subpart A → §359.19


Title 31: Money and Finance: Treasury
PART 359—OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I
Subpart A—General Information


§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

3For 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.)

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