Patriot Bonds: Defined and Explained | The Motley Fool (2024)

After the September 11 attacks on New York City and Washington D.C., the U.S. government started issuing Patriot Bonds. If you’re holding a Patriot Bond, you probably want to know exactly what it is, what it’s worth, and how to cash it in. Read on to find out all that and more.

Patriot Bonds: Defined and Explained | The Motley Fool (1)

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What are Patriot Bonds?

What are Patriot Bonds?

Patriot Bonds are special edition Series EE savings bonds that were issued from December 2001 to December 2011. The U.S. Department of the Treasury printed "Patriot Bond" on these savings bonds and used them to fund anti-terrorism programs.

The government stopped issuing paper savings bonds in 2012, effectively ending the issuance of Patriot Bonds. If you want to buy bonds, you can do so online.

For bond investors and savers, there’s practically no difference between a Patriot Bond and any other Series EE savings bond. The words printed on the paper bond were the defining characteristic with this type of Treasury bond.

You could buy a Patriot Bond in any denomination between $25 and $10,000. The face value of the bond is twice what was paid, so you would have only paid $50 for a Patriot Bond with $100 printed on it. The fact that you know how much you're getting is one of the advantages of bonds compared to stocks as an investment.

What is my Patriot Bond worth?

What is my Patriot Bond worth?

Every Patriot Bond is guaranteed to double in value after 20 years. So if you have an original Patriot Bond issued in December 2001, it became worth its face value (at least) in December 2021. Patriot Bonds accrue interest for 30 years, unless cashed before then.

If it hasn’t been 20 years since issuance, you can still cash in your Patriot Bond, but it’s probably not a great idea. You can look up the exact value of your Patriot Bond by using the calculator on the Treasury Direct website.

Patriot Bonds issued before May 2005 earn a variable rate of interest that changes every six months. The new rates are announced on May 1 and November 1 of every year and apply to all Series EE bonds issued between May 1997 and April 2005.

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The rate goes into effect for those bonds starting six months after their last rate change. For example, bonds issued in December will see their rates change in June and December every year.

Bonds issued in May 2005 or later earn a fixed interest rate. You can continue to hold your Patriot Bond beyond the 20-year maturity and earn the fixed interest rate, which you can look up using on the Treasury Direct website.

Patriot Bonds issued between May 2005 and April 2008 earn 3% or more per year. However, the impact of the Great Recession led to a significant drop in interest rates in 2008. If the guaranteed interest rate is appealing, you can continue to hold your Patriot Bond as long as 10 years after maturity. People holding bonds with low interest rates, however, may want to sell bonds right at 20 years.

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Interest Rate

An interest rate is the cost of borrowing money or the premium you get for lending money. Learn how interest rates affect the economy.

How to cash in a Patriot Bond

How to cash in a Patriot Bond

If you’re ready to cash in a Patriot Bond, you can usually do so at your local bank or credit union. Some have stopped accepting savings bonds, though, so be sure to contact your financial institution to be sure you can cash in the bond.

All you have to do is bring your Patriot Bond, your ID, and your bank account information to your bank, and you’ll be able to deposit the bond. The process is similar to depositing a check, and a banker or teller can walk you through it.

If your local bank or credit union will not cash your Patriot Bond, you can send them directly to Treasury Direct. Here's how:

  • Fill out FS Form 1522.
  • Get your signature certified if you're redeeming more than $1,000 worth of bonds.
  • Send the bonds and your documentation to Treasury Direct.

If you’ve converted your Patriot Bond to an electronic bond, you can cash the bond online. Log into your Treasury Direct account and click the link for cashing securities.

Note: You can't cash in a Series EE savings bond within a year of issuance. You’ll also pay a penalty of three months’ worth of interest if you redeem one within five years. But since all Patriot Bonds were issued before 2012, that’s not an issue for Patriot Bond holders.

When you redeem your Patriot Bond, you’ll receive a 1099-INT detailing the amount of interest earned on the savings bond. The interest is exempt from state and local tax, but you’ll owe federal income tax on that amount.

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Federal Income Tax

The federal income tax is the primary source of revenue for the United States government.

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The bottom line

The bottom line

Patriot Bonds, like all other Series EE savings bonds, will double in value after 20 years. It often makes sense to cash in bonds right at 20 years to maximize your returns, but some carry a good fixed interest rate that may make it worthwhile to hold them for as long as 10 more years until the savings bond reaches maturity.

Patriot Bond FAQs

Patriot Bond FAQs

What is a Patriot Bond?

A Patriot Bond is a Series EE savings bond issued between December 2001 and December 2011. This was a special edition savings bond made to fund anti-terrorism programs, and each one has the words "Patriot Bond" printed on it. It works the same way as any other Series EE savings bond.

How much is a $50 Patriot Bond worth?

The value of a Patriot Bond depends on its face value and its date of issuance. Every Patriot Bond earns interest, which accrues in six-month periods. 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.

Do you have to pay taxes on Patriot Bonds?

Yes, you have to pay taxes on Patriot Bonds. The interest that your savings bond earns is subject to federal income tax, but not state or local income tax. It's also subject to any federal estate, gift, and excise taxes and any state estate or inheritance taxes. You can either report each year's earnings or wait and report all the earnings when you cash the bond.

How long do you have to wait for a Patriot Bond to mature?

It takes 30 years for a Patriot Bond to mature, but you can cash it in before then. Patriot Bonds are guaranteed to be worth at least the face value 20 years after they were issued.

When can I cash in my Patriot Bonds?

If you currently hold a Patriot Bond, you’re able to cash it now. However, you’re unable to cash in a Series EE savings bond within one year of issuance, and you’ll pay a penalty of three months’ interest if redeemed within five years. (Since all Patriot Bonds were issued before 2012, that’s not a concern.)

What is the interest rate on Patriot Bonds?

The interest rate for a Patriot Bond depends on its date of issuance. If issued in May 2005 or later, it has a fixed interest rate. If issued before then, it has a variable interest rate. You can look up the current interest rate of a Patriot Bond on the Treasury Direct website.

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Patriot Bonds: Defined and Explained | The Motley Fool (2024)

FAQs

Patriot Bonds: Defined and Explained | The Motley Fool? ›

The value of a Patriot Bond depends on its face value and its date of issuance. Every Patriot Bond earns interest, which accrues in six-month periods. After 20 years, the Patriot Bond is guaranteed to be worth at least face value.

How long does it take for a $100 Patriot bond to mature? ›

Current Series EE bonds mature after 30 years, but they are guaranteed to double in value in the first 20 years during which time the interest rate is fixed. For example, if you invested $5,000 into Series EE bonds today, you are guaranteed to have at least $10,000 in 20 years.

What is a Patriot bond and how does it work? ›

What Is a Series EE Bond? The Series EE Bond (often referred to as a "Patriot Bond") is a non-marketable, interest-bearing U.S. government savings bond. These bonds are guaranteed to at least double in value over the typical 20-year initial term.

How much is a $100 EE savings bond worth after 30 years? ›

How to get the most value from your savings bonds
Face ValuePurchase Amount30-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

Should I buy series EE or series 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.

How much is a $50 Patriot bond worth after 20 years? ›

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.

When can Patriot bonds be cashed? ›

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 5000 Patriot bond worth? ›

Total PriceTotal ValueTotal Interest
$5,000.00$7,216.00$2,216.00

What is the difference between a savings bond and a patriot bond? ›

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.

What should I do with my Patriot bond? ›

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.

Is it better to invest in bonds or CDs? ›

Bonds are typically longer, higher-risk investments that deliver greater returns and a predictable income. Bonds are also more liquid than CDs because you can buy or sell them on the secondary market—although some bonds may be harder to sell than others.

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.

Why is my $100 savings bond only worth $50? ›

There are two primary reasons a bond might be worth less than its listed face value. A savings bond, for example, is sold at a discount to its face value and steadily appreciates in price as the bond approaches its maturity date. Upon maturity, the bond is redeemed for the full face value.

What are the disadvantages of TreasuryDirect? ›

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

Why do Series I bonds pay so much? ›

Unlike traditional savings bonds, I Bonds earn interest through a combination of a fixed rate, which remains constant throughout the life of the bond, and a variable inflation rate that is adjusted twice a year based on changes in the Consumer Price Index (CPI).

Is there a penalty for not cashing in matured EE 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.

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.

How much is a 500 dollar Patriot bond worth? ›

Total PriceTotal ValueYTD Interest
$500.00$2,127.80$50.40

How long does it take for a Series EE Patriot bond to mature? ›

All Series EE Bonds reach final maturity 30 years from issue.

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