What is a 'Series EE Bond'

The Series EE Bond, also known as the "Patriot Bond" is a non-marketable, interest-bearing U.S. government savings bond that is guaranteed to at least double in value over the initial term of the bond, typically 20 years. Most Series EE bonds have a total interest-paying life that extends beyond the original maturity date, up to 30 years from issuance.

BREAKING DOWN 'Series EE Bond'

Series EE bonds issued after May 2005 are assigned a fixed coupon rate; rates are set twice per year in May and in November and apply to all issuances for the ensuing six months. Bonds issued after this date increase in value monthly, but interest payments are semiannual.

Paper EE bonds were re-issued as Patriot Bonds after the September 11, 2001 terrorist attacks. They are identical in every way to the paper Series EE Bonds except that any paper bonds purchased through a financial institution after December 10, 2001 have the words "Patriot Bond" printed on the top half of the bond between the Social Security Number and the issue date. Financial institutions no longer issue Series EE bonds in paper form, but the paper "Patriot Bonds" can still be cashed or converted to electronic bonds. 

Paper bonds were issued at a 50% discount to par, while bonds purchased electronically (through TreasuryDirect) are purchased at face value; the latter are still guaranteed to be worth twice their original value at first maturity date after 20 years, and pay interest the same way as paper EE bonds.

Series EE bonds are considered ultra-safe, low-risk investments. Interest on Series EE bonds is typically exempt from state and local taxes, and coupon rates are assigned based on a percentage of the long-term Treasury rates at the time of issuance.

Savings bonds must be held at least one year before they can be redeemed. If they are held for less than five years, a penalty of three months' interest will be assessed when the bonds are redeemed.

RELATED TERMS
  1. Government Bond

    A debt security issued by a government to support government ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
  4. Term Bond

    Bonds from the same issue that share the same maturity dates. ...
  5. Bond Yield

    The amount of return an investor will realize on a bond. Several ...
  6. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
Related Articles
  1. Investing

    Savings Bonds For Income And Safety

    Bonds offer undeniable benefits to investors, including safety and tax advantages.
  2. Investing

    What Taxable Interest Must Bond Investors Report?

    Many factors impact the amount of taxable interest bond investors must report.
  3. Investing

    Top 6 Uses For Bonds

    We break down the stodgy stereotype to see what these investments can do for you.
  4. Investing

    Investing in Bonds: 5 Mistakes to Avoid in Today's Market

    Investors need to understand the five mistakes involving interest rate risk, credit risk, complex bonds, markups and inflation to avoid in the bond market.
  5. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  6. Investing

    The Best Bet for Retirement Income: Bonds or Bond Funds?

    Retirees seeking income from their investments typically look into bonds. Here's a look at the types of bonds, bond funds and their pros and cons.
  7. Investing

    How To Evaluate Bond Performance

    Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk.
RELATED FAQS
  1. What is the difference between EE and I Bonds?

    Read about the similarities and differences between the EE and I savings bond programs created by the U.S. Department of ... Read Answer >>
  2. What determines the price of a bond in the open market?

    Learn more about some of the factors that influence the valuation of bonds on the open market, and why bond prices and yields ... Read Answer >>
  3. What happens to the price of a premium bond as it approaches maturity?

    Learn how bonds trade in regard to premiums and discounts, and how bond prices shift closer to par value as bonds approach ... Read Answer >>
  4. Will the price of a premium bond be higher or lower than its par value?

    Find out why the selling price of a premium bond is always higher than its par value, including how changing interest rates ... Read Answer >>
Hot Definitions
  1. Trickle-Down Theory

    An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors ...
  2. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  3. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  4. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  5. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  6. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
Trading Center