Purchasing Savings Bonds Online
Generations of grandparents have given U.S. Savings Bonds as gifts on birthdays and graduations, and generations of workers have dutifully bought them through regular payroll deductions. More than $195 billion of the bonds are stuffed into sock drawers and safe deposit boxes across the country, as much a part of Americana as baseball and apple pie. They're patriotism in paper and ink, an icon as much as an investment vehicle.
But the paper-and-ink part of the equation is about to disappear. The Treasury Department plans to kick off an "awareness campaign" this fall to let investors know it won't be issuing paper bonds much longer. Once 65 percent of current bond buyers are aware of the impending change, the feds say they'll announce a timeline for phasing out the old and bringing in the new. The new, in this case, will mean that everyone who wants a Savings Bond will have to open a TreasuryDirect Internet account. No more tromping down to the neighborhood bank.
The Treasury Department wants to make the change to save money, but buying Savings Bonds online does have advantages for investors. Unlike banks, the bond buyers' Web site, www.treasurydirect.gov, is open 24 hours a day, seven days a week. You can also buy bonds online in any penny increment above $25, rather than being limited to specific denominations. Best of all, Internet Savings Bonds will be deposited in your bank account once they're done collecting interest, unlike the billions of dollars worth of paper bonds moldering in closets and boxes.
There will be some unhappiness from people who don't have Web access or don't want to give out their bank account information to a government Web site. Treasury also has to work out the kinks to allow minors to have accounts in their own names so grandma and grandpa can still give bonds as gifts. But a government spokes-person says they will help people along, and that it's only a matter of time before all Treasury bills, bonds and notes are moved to TreasuryDirect.
Michael Zmistowski, a financial planner in Tampa, Florida, who specializes in retirement income issues, says he's a fan of the TreasuryDirect site. But he says he worries about people, especially older Savings Bond customers, who don't use the Internet. "They've really made it simple," Zmistowski says of the site. "For people who like to do it themselves and who use the Internet, it's a great thing. For everybody else, we'll have to see."
Scott Bernard Nelson is a financial writer at The Boston Globe.