Commonly known as a “war bond,” the Series EE Patriot Bond was created three months after September 11, 2001. The purpose was to allow Americans to show their patriotism by loaning their money to the government’s anti-terrorism efforts. In reality, the bonds are simply paper Series EE Bonds with “Patriot Bond” printed between the buyer’s social security number and the issue date. The proceeds from these bonds are deposited not into a special fund to fight anti-terrorism, but into the federal government’s general fund.

Like an ordinary Series EE Bond, the Patriot Bond is limited to $5,000 of bonds sold per social security number. The lowest denomination available is $25. The bonds are redeemable after a year and are exempt from income taxes levied by local and state governments. All other rules, restrictions, and conditions of Series EE bonds apply to Patriot Bonds. For example, Patriot Bonds are available through any banking institution as well as the U.S. Treasury’s Web site at www.treasurydirect.gov. All Series EE and Treasury Bonds issued after May 1, 2005, earn a fixed interest rate that is recalculated semiannually. All paper Series EE Bonds, including Patriot Bonds, are sold at half their face value. Thus, you can buy a $100 Patriot Bond for $50.

The redemption conditions of a Series EE Bond also apply for a Patriot Bond. They are redeemable after a year. However, doing so subjects the holder to a penalty of three of the most recent months’ interest. If redeemed after 5 years, there is no penalty. After 30 years, the bonds draw no interest. At that time, the federal tax on the interest income is due as well. For Patriot Bonds redeemed before the 30-year maturity date, the interest is due upon redemption.

Despite the stipulations, Patriot Bonds can be a great way to show patriotism by helping the U.S. government, and earning a modest amount of interest on your money. They are usually a safe investment, much safer than the stock market, but with a much lower potential return.