Last night while noodling around on the web, I ran across a press release from the Treasury stating that they will stop over-the-counter sales of paper U.S. Savings Bonds at the end of the year. In other words, you’ll no longer be able to stroll into your bank and load up on Series I or EE Savings Bonds.
The stated goal here is to save money – up to $70M over the first five years – by getting people to buy savings bonds online via TreasuryDirect. I’m all for saving money, but…
As things currently stand, you can buy up to $5k worth of Series I Savings Bonds in paper form, and another $5k online – i.e., there’s a $10k combined limit. Now that you can’t paper bonds at the bank, what will happen to the limit? Will it be effectively cut in half? Or will the Treasury bump up the online limit?
It’s also unclear if they’re just dropping OTC sales in banks, or if they’re also cutting off mail-in sales. While it would make sense for them to move away from paper entirely, the press release clearly states that paper bonds will still be available for purchase using your tax refund, so who knows?
My suspicion is that they’ll leave the online purchase limit where it stands (at $5k) because you’ll still be able to buy paper bonds, albeit in a limited and inconvenient way – by overpaying your taxes and then using the refund to buy paper bonds. Who knows… We’ll just have to wait and see.
Oh, and for what it’s worth, if you currently hold paper bonds, you’ll be able to continue redeeming them at your local bank. And if you lose your bonds, you can still have them re-issued in paper form.
Update: Based on discussions on the Bogleheads forum (which include a couple of e-mail responses from the Treasury), it sounds like the mail-in program will also be discontinued, and that the online limit will stay the same – $5k for I Bonds, $5k for EE bonds. Bummer.
Source: TreasuryDirect.gov
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I agree with Nickel re: the default issue. For me it’s more an issue – pun intended – of the rates the I bonds have had the past few years. It’s totally pointless if the fixed rate is at 0%.
So, that said I am using my “high” yield rewards checking account at my CU for now.
The first thought I had when I read about no more issuing of paper bonds was about those who are without a computer. You’re required to set up an account online to park your purchased bonds. I guess grandparents can always use their kids’ or grandkids’ computer and since security is pretty tight in order to access the treasury website, it’s do-able, yes?
My son just had his Christening and we got tons of the paper bonds, sort of weird that they’ll be going away. I thought they were kind of a cool gift.
That’s not the kind of default that I’d worry about. That’s a bunch of political theater and will blow over regardless of what happens in the next few weeks.
Not sure I would even consider buying US Government debt when we have a congress considering defaulting on that debt right now…