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Patriot Savings Bond is reliable and low-risk government-based saving product that is used to finance wars such as terrorism. It is said that this bond has some similarity with its predecessor, EE Savings Bond with the exception that the name “Patriot Bond” is inscribed at the top of the bond paper. The stamp appears to be between the Social Security Number and the Date of Issue.
Patriot Bonds are normally not earmarked for specific wartime spending or programs but it is clear that the federal government uses this bond to contribute towards the fight on terrorism. Once an individual buys a Patriot Bond, the money is channeled to Treasuries General Fund. A Patriot Bond shares the same terms and conditions with EE Savings Bonds except the stamp and the position of the stamp.
The premier Patriot Bonds came into play in mid-December 2001. These Bonds are normally sold over the counter at banks, credit unions as well as other financial institutions. Normally, these bonds are sold for half their face value even as they increase in value every month and the interest is compounded every six months.
There are many financial institutions serving themselves as savings bond agents. However, you can also contact your bank or financial institution to see if they provide Patriot Bonds. You may also buy this bond via Internet at www.treasurydirect.gov
However, there are restrictions to purchasing Patriot Bonds. In January 2008, a law was passed to restrict the purchasing of these bonds to a maximum of $10000 face value every year.
How Long Does It Take to Cash In a Patriot Bond?
This bond matures at 30 years from their date of issue, which means the bond gets to earn interest for the years stipulated. Nonetheless, the buyer is guaranteed that the bond will reach its initial maturity level at its 20th year anniversary. Once this initial maturity is reached, the buyer may opt to redeem his bond.
However, there is a 3-month interest penalty when a bond is redeemed five years before its full maturity stage. As for the taxation on the interest, the interest earned is tax exempt from both state and local income tax, and the federal government does not tax the interest if it is used for education purposes.
Redeeming (Cashing) Patriot Bonds – How to Cash Patriot Bonds?
Cashing in the bond without the 3-month penalty is only exempted in the case of a Federal disaster that has been declared. Just like EE Savings Bonds, cashing in the Patriot Savings Bonds takes no time though it is important to call your bank first and confirm whether they can do it for you. This is because some banks do not handle US Savings Bonds.
It is also important to know what your bonds are worth before starting the cashing in process. This is because some banks may error when calculating the value of the bond, giving out a lower value that what the bond actually earned.
Can I Cash in a Patriot Bond Before a Year?
As a buyer, it is important to note the current Patriot Savings Bonds rates, which are set every May 1st and November 1st that takes effect for all bonds issued within the six months period between the two dates. The interest rate is set by the Treasury based on a 10-year. Treasury note yields as well as adjustments for specific features that the particular bond holds, such as tax deferral feature as well as the option to redeem bonds before their initial stage of maturity.
