US savings bonds to go paperless
It's your last opportunity to slip a paper savings bond into a child's Christmas stocking.
Since 1935, grandparents have been giving their children's children U.S. savings bonds for birthdays, holidays and graduations. An investment that also provides valuable lessons about saving money, a paper savings bond can be placed in a box with a bow, or at least tucked inside an envelope.
As of Jan. 1, this gift-giving tradition won't be the same because, like so many other things in our financial lives, U.S. savings bonds are going paperless.
Children didn't necessarily appreciate the bonds when they opened them -- "It was one of those things, like getting underwear," my friend Lorie recalls -- but they usually did later.
As Pocket Changed blogger Caleb Wojcik wrote:
Every Christmas my grandparents gave me savings bonds. "Can I spend it?" I would ask. "Not yet," my mom would say, "but someday." At the time I was confused, but now I realize how thoughtful a gift it was.
In 2012, the bonds will no longer be available for purchase at banks and other financial institutions and can be bought in electronic form only at TreasuryDirect.gov.
Value of savings bonds
Savings bonds are debt securities issued by the U.S. Treasury Department. About 7 billion paper bonds have been sold and circulated, Joyce Harris, a Treasury Department spokeswoman, told CNNMoney.
"U.S. savings bonds are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government," says the U.S. Securities and Exchange Commission website.
One reason for their popularity as gifts is that minors are allowed to hold U.S. savings bonds in their own names. With electronic savings bonds, parents will have to set up accounts for anyone under 18, but minors can own savings bonds via linked accounts.
Post continues below.
Going paperless will save money
Part of an "all-electronic initiative," the switch to paperless savings bonds is projected to save the department as much as $120 million over five years by eliminating printing, mailing, storage and fees paid to financial institutions for processing applications.
If you want to convert your Series E, EE or I paper bonds to electronic securities, you can do so via the SmartExchange program, which walks you through the process and spells out the advantages of going digital. As you do with other financial accounts, you'll have 24-hour access to your savings bonds.
Another advantage of electronic savings bonds: You can purchase them in any value, from $25 to $5,000, in penny increments. Paper bonds were available only in specific denominations. So you can purchase a $50.11 bond for your grandson's 11th birthday, for example.
Will paper savings bonds be missed? The move to digital penalizes people who aren't computer-savvy, Allen Schwartz told the St. Petersburg Times, such as his 88-year-old mother-in-law. "She's disabled, legally blind, has no computer and can't do things online," he said.
MainStreet's Matt Brownell argued that children can get a better rate of return -- and learn more about investing -- if you give them an old-fashioned stock certificate.
Series I bonds purchased with tax refunds will still be available in paper form in 2012, according to the Treasury Department, but that may change in the future as well, UPI.com reported.
If you received paper savings bonds as a child, and would like to share that experience with your children or grandchildren, it's not too late to buy them for one last generation's Christmas stockings.
Who knows, years from now your gift may have added value in being one of the last paper savings bonds issued.
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Stupid idea. I realize the cost of the bonds is too high in relation to the value for small bonds.
We used to pay $18.75 for a $25 bond when that was worth much more than today.
The solution would be to increase the minimum value. Maybe sell the bonds at full face value just like the I bonds & have a minimum of perhaps $100.
I have been buying my grandchildren bonds for Christmas, birthdays etc for nearly twenty years & it was my intention that they should go to help with their college expenses.
Electronic bonds are just not the same thing.
Unhappy, I wholeheartedly agree. The thrill of receiving paper bonds as a kid will not equal looking at digits on a monitor. Its amazing how our government's so eager to convert to digital to save some paltry amount of money, when they cannot figure out how to get rid of the paper dollar and save billions over 30 years. Instead, they decided to discontinue the Presidential $1 coin series, in concert with this brilliant move.
Here's a hint, CONgress...why dont you all give back your salaries to the Treasury for a year, since you get paid plenty to pass corrosive legislation, play the markets with inside information and thats besides all the taxpayer paid perquisites.
I just bought the last pair of bonds for the kids. They dont yield enough currently anyway.
Amazing how quickly this discussion turned into a government bashing opportunity. Whatever happened to patriotism? US savings bonds are a way for our government to borrow money from its own citizens, and pay interest to THEM, not China. When I was young, people knew that buying savings bonds was a form of patriotism. Everyone knew that you weren't going to get rich buying savings bonds. And people were proud to buy them. Now we can't wait to complain about our country. Seems like no matter what topic comes up for discussion on the internet, it immediately turns into a government bashing opportunity.
Here are some actual facts about the series I savings bonds. Hope this will clear up some of the misinformation posted... You don't have to keep a savings bond all the way to 30 years. If you cash them in before 5 years, you will take a very small hit. You will be penalized the amount of interest you would have earned over the last 3 months. Cash them in anytime you like after 5 years without a penalty. They stop paying interest after 30 years, so there is no reason to keep them past 30 years. The I series bonds were designed to be a hedge against inflation. Every 6 months a new interest rate is calculated based on the consumer price index. So, if inflation starts to go up, you are somewhat protected. I think the I series is currently paying about 3%. You can get some accurate information about the I series savings bond on the US Treasury website.
If you already have a savings bond, and would like to know exactly what it is worth today, there is a calculator on the treasury website also. In order to use the calculator, you need to know the bond issue date, amount, serial number, and type (I or EE).
By the way, I believe that the I series savings bonds are currently paying better than most certificates of deposit. Five years pass by pretty quickly, so if you wanted a place to park a little money, beat CD rates, avoid any penalties, and help your country - maybe the i series bond isn't such a bad idea. And no, I don't work for the government or the financial sector. Hope this post will help people make decisions based on objective information, not anger and frustration.
maggie, I certainly do. I was just commenting to the daughters the other day, when asked why I dont do more 'on line' and I had to dredge up article after article reporting on all the invasive actions computers are susceptible to. Naturally, I am sure they ignored it all, however, I planted the seed.
We have - sadly- created a new segment of the population to discriminate against;
the "Computer challenged". At its base, no, its not fair. And its illogical, since while subtly and directly prompting us to do everything on line, they simultaneously wonder why the Post Office is going broke!
(Don't tell me about gold. In some sort of economic post-apocalyptic world, gold will have no value, either. Its intrinsic value is limited to its industrial uses, and in a world economy that has completely collapsed, no one is going to be gold-plating any electrical contacts.)
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