Introduction
The U.S. Savings Bonds of Series EE, known as the patriotic bonds, were first issued in December 2001 with the aim of supporting anti-terrorism efforts following the September 11 attacks.
Main Information
The U.S. Savings Bonds of Series EE were issued from December 2001 to December 2011. The interest on the U.S. Savings Bonds will accumulate on the amount paid for the bonds (which was half the face value of the U.S. Savings Bonds) for a duration of 30 years. They were guaranteed by the U.S. government to double in value in no less than 20 years. If you wish, you can convert the paper U.S. Savings Bonds into electronic bonds through the Smart Exchange program available at TreasuryDirect.
Background
The U.S. Savings Bonds were issued for a duration of only 10 years, from December 2001 to December 2011, and could be purchased in any amount, including any number of cents, from $25 to $10,000. This means you could buy one for $25.01 or $8,763.
The U.S. Treasury informed investors at the time that the proceeds from the savings bonds would be deposited in the general fund of the federal government and spent on anti-terrorism programs.
The patriotic bonds purchased through some qualified financial institutions were eligible for writing on the patriotic bonds. Other Series EE savings bonds, such as those purchased through payroll savings plans, were processed differently and through different vendors who did not have the necessary printing equipment. Therefore, the only reason not all of those series of bonds for those years were patriotic bonds is that the words were not printed on some.
Interest Information
The interest on the U.S. Savings Bonds and all other Series EE bonds will accumulate on the amount paid for the bonds (which was half the face value of the U.S. Savings Bonds) for a period of 30 years and was guaranteed by the U.S. government to double in value in no less than 20 years. If the bonds do not accumulate enough interest in 20 years to double in value, the Treasury provides a lump sum payment to make up the difference.
The U.S. Savings Bonds purchased before May 1, 2005, pay a variable interest rate that is subject to change every six months. Those purchased after that date pay the same fixed rate for at least 20 years.
Bonds purchased from November 1, 2019, to April 30, 2020, have an interest rate of 0.1% for the first 20 years. The interest rate for savings bonds purchased during the following six months is announced on May 1 and November 1 of each year.
Interest accumulates every six months. This means that the interest earned in the previous six months is added to the principal amount of the bonds, and the next interest amount will be calculated using this new total.
Cash Redemption
You can redeem the savings bond after one year from the issue date. However, if you redeem the bonds within five years from the issue date, you will forfeit three months of earned interest.
You must pay federal income tax, but not state or local taxes, on the interest earned from the bonds. However, you can avoid federal income tax if you use your bond proceeds to pay for qualified educational expenses.
Status
Current
If you wish, you can convert your paper U.S. savings bonds to electronic bonds by using the Smart Exchange program available on TreasuryDirect, or you can simply hold onto them until you decide to cash them in.
At the end of 2011, the Treasury Department stopped offering paper U.S. savings bonds and other paper savings bonds through financial institutions. The only way to purchase non-electronic savings bonds is to pay for them using your income tax refund. These bonds can only be purchased in increments of $50. Any amount of your refund that is not used to purchase savings bonds will be sent to you by mail in the form of a check.
You can determine the current value of a national savings bond by entering the information into the calculator on TreasuryDirect. You will need to provide the series (which is EE for all Freedom Bonds), the denomination (amount in dollars), the serial number, and the issue date.
Source: https://www.thebalancemoney.com/what-are-patriot-bonds-357466
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