Some investors are confused about the differences between Patriot Bonds and Series EE savings bonds. Patriot Bonds are in fact Series EE U.S. savings bonds that were first issued in December 2001, with the intention of getting Americans to support anti-terrorism efforts after the September 11 attacks.
Aside from that intended purpose, there's essentially no difference between the two types of savings bonds except for the appearance of the words "Patriot Bond" on the face of those bonds.
Key Takeaways
- Patriot Bonds are Series EE U.S. savings bonds that were issued from December 2001 to December 2011.
- Patriot Bonds and all other Series EE bonds will accrue interest on the amount paid for the bonds (which for Patriot Bonds was half of the face value) for 30 years.
- They were guaranteed by the U.S. government to double in value in no less than 20 years.
- If you want, you may convert your paper Patriot Bonds into electronic bonds through the Smart Exchange program available at TreasuryDirect.
The Backstory
Patriot Bonds were issued for just 10 years, from December 2001 through December 2011, and could be purchased in any amount, including any number of cents, from $25 to $10,000. That means you could buy one for, say, $25.01 or $8,763.
The United States Treasury told investors at the time Patriot Bonds were first issued that proceeds from the savings bonds would be deposited into the federal government's general fund and spent on anti-terrorism programs.
Only Patriot Bonds purchased through certain financial institutions were eligible for the Patriot Bond inscription. Other Series EE bonds, such as those bought through a payroll savings plan, were processed differently and through different vendors that didn't have access to the requisite printing equipment. So the only reason all of that series of bonds for those 10 years couldn't be Patriot Bonds was that the words couldn't be printed on some of them.
Interest Information
Patriot Bonds and all other Series EE bonds will accrue interest on the amount paid for the bonds (which for Patriot Bonds was half of the face value) for 30 years, and they were guaranteed by the U.S. government to double in value in no less than 20 years. If the bonds haven't accrued enough interest in 20 years to double in value, the Treasury provides a one-time payment to make up for the shortfall.
Patriot Bonds purchased before May 1, 2005, pay a variable interest rate that is subject to change every six months. Those that were purchased after that date pay the same fixed rate for at least the first 20 years.
Bonds bought from Nov. 1, 2019, through April 30, 2020, will have an interest rate of 0.1% for those first 20 years. The rate for saving bonds purchased during the following six months is announced on May 1 and Nov. 1 of every year.
Interest is compounded every six months. That means interest earned in the previous six months is added to the principal amount of the bond, and the next interest amount will be calculated using that new total.
Note
The 0.1% interest rate on savings bonds has not changed since May 1, 2015, when it was 0.3%. In the six months starting on May 1, 2006, the interest rate was 3.7%, the highest rate since May 2005.
Cashing In Bonds
You can cash in a savings bond starting one year after it was issued. But if you cash in bonds within five years of the issuance date, you will forfeit the last three months of earned interest.
You must pay federal income tax, but not state or local taxes, on the interest you earned from the bonds. However, you can avoid federal income tax if you use your proceeds from the bonds to pay for a qualifying educational expense.
Current Status
If you want, you may convert your paper Patriot Bonds into electronic bonds through the Smart Exchange program available at TreasuryDirect, or you can just hold on to them until you decide to cash them in.
At the end of 2011, the Treasury Department stopped offering paper Patriot Bonds and other paper EE savings bonds through financial institutions. The only way to buy non-electronic savings bonds is by paying for them with your income tax refund. These bonds can be bought only in increments of $50. And any amount of your refund that's not used to buy savings bonds will be mailed to you in the form of a check.
You can determine the current value of a Patriot Bond by entering information in the calculator at TreasuryDirect. You will have to provide the series (which is EE for all Liberty Bonds), the denomination (dollar amount), the serial number, and the issue date.
FAQs
After 20 years, the Patriot Bond is guaranteed to be worth at least face value. So a $50 Patriot Bond, which was bought for $25, will be worth at least $50 after 20 years. It can continue to accrue interest for as many as 10 more years after that.
How long does it take for a $50 Patriot bond to mature? ›
All Series EE bonds, including Patriot Bonds, reach full maturity and stop earning interest after 30 years. That means you'll want to cash your Patriot Bonds sometime between when you purchased them and when they reach full maturity. Because Patriot Bonds are paper investments, you can redeem them at your local bank.
When can Patriot bonds be cashed? ›
Can I cash it in before 30 years? You can cash in (redeem) your EE bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.
How much is a $100 series EE bond worth after 30 years? ›
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
May 7, 2024
Government debt and the 10-year Treasury note, in particular, are considered among the safest investments. Its price often (but not always) moves inversely to the trend of the major stock market indexes. Central banks tend to lower interest rates in a recession, which reduces the coupon rate on new Treasurys.
What is the final maturity of a $100 savings bond? ›
U.S. Savings Bonds mature after 20 or 30 years, depending on the type of bond: Series EE bonds mature after 20 years. They are sold at half their face value and are worth their full value at maturity. Series I bonds are sold at face value and mature after 30 years.
What is the penalty for not cashing matured savings bonds? ›
While the Treasury will not penalize you for holding a U.S. Savings Bond past its date of maturity, the Internal Revenue Service will. Interest accumulated over the life of a U.S. Savings Bond must be reported on your 1040 form for the tax year in which you redeem the bond or it reaches final maturity.
Which is better, EE or I savings bonds? ›
Bottom line. I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.
Is it worth waiting for bonds to mature? ›
For example, if you redeem a bond after 24 months, you'll only receive 21 months of interest. Depending on the interest rate of your bond and your own financial needs, it's generally beneficial to wait until full maturity to redeem them.
Can you cash Patriot bonds at any bank? ›
You can cash paper bonds at a bank or through the U.S. Department of the Treasury's TreasuryDirect website. Not all banks offer the service, and many only provide it if you are an account holder, according to a NerdWallet analysis of the 20 largest U.S. banks.
You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered, including: Tuition.
Can I cash my deceased parents' savings bonds? ›
TO CASH BONDS FOR A DECEDENT'S ESTATE:
Series EE, Series E, and Series I bonds can be cashed at a local financial institution. Some of these transactions may have to be forwarded for further processing. Series HH and Series H bonds must be sent to one of the addresses shown at the bottom of the following page.
Do EE bonds really double in 20 years? ›
EE bonds you buy now have a fixed interest rate that you know when you buy the bond. That rate remains the same for at least the first 20 years. It may change after that for the last 10 of its 30 years. We guarantee that the value of your new EE bond at 20 years will be double what you paid for it.
Do bonds expire after 30 years? ›
At 20 years, the government ensures that you will be paid double the face value of the bond. Although they technically mature after 20 years, these bonds actually don't expire for 30 years. You'll keep earning interest for an extra decade.
How long does it take for a $50 savings bond to mature? ›
Key points. Series EE bonds mature in 20 years but earn interest for up to 30 years. The U.S. Treasury guarantees Series EE bonds will double in value in 20 years. You don't receive the interest on your Series EE bond until you cash it.
How much does a savings bond grow in 20 years? ›
We guarantee that the value of your new EE bond at 20 years will be double what you paid for it. (If you have an EE bond from before May 2005, it may be earning interest at a variable rate.
What is the return on bonds for the last 20 years? ›
If you purchase a 10-year Treasury at time of writing, you could expect a yield of about 4.45%. Based on yields over the past 20 years, you can expect average interest payments of between 3% and 4%.
Do savings bonds double after 20 years? ›
If you purchase a Series EE bond today, you are guaranteed to earn a fixed interest rate for 20 years, which is when the bond matures. At 20 years, the government ensures that you will be paid double the face value of the bond.
Can you sell a 20 year bond? ›
We sell Treasury Bonds for a term of either 20 or 30 years. Bonds pay a fixed rate of interest every six months until they mature. You can hold a bond until it matures or sell it before it matures. EE Bonds, I Bonds, and HH Bonds are U.S. savings bonds.
