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US savings bonds to go paperless

It's your last opportunity to slip a paper savings bond into a child's Christmas stocking.

By Giselle Smith Dec 21, 2011 5:59PM

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

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, 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.

More on MSN Money:

Dec 21, 2011 8:05PM
This sucks!!!  I am 70 years old.  I got savings bonds when I was born....although they were called war bonds.  With those bonds I paid for my education.  We have been buying bonds for our grandchildren and putting them away to find we we are gone.  I think the federal government  problems extend to all branches and 120 million is just a mere drop in the bucket.  There are many grandparents who are doing this and it just really makes me mad..  And what if there is a computer screw up....gee imagine that....and there is no proof that you purchase anything for your grandchild.  Leave it to our government to mess up something that has been working for 75 years. 
Dec 21, 2011 6:51PM

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.

Dec 21, 2011 7:25PM
My concern would be with all the hacking online would be whether or not this would be a risk going paperless.  Anybody else agree with me?
Dec 21, 2011 7:43PM

I have bought Savings Bonds for my Grandchildren and Great Grandchildren, at

Christmas and Birthdays for years, but "NO MORE" it would be a nightmare trying

to keep track of them, The Government is "Penny Wise"  "Pound Foolish" , but

what else is new!!

Dec 21, 2011 7:12PM

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.

Dec 21, 2011 8:41PM
Another huge mistake by our inept government.
Dec 21, 2011 8:20PM

 Leave it to our government to mess up something that has been working for 75 years


Judy, you said it! They are getting better at getting worse, and that does not pertain just to Savings Bonds.

Dec 21, 2011 8:17PM
Hey we go. now we have to rely on this bunch of morons to keep track of bond purchases without the bonds. Kinda like Bernie Madoff, give me your money and I'll give it back in 5 years plus interest, "Trust me". Okay and I want that bridge you have for sale too. Please. It took Balls for this bunch to put Madoff in jail for running a Pozi scheme, when they have presided over the largest such scam in the history of man kind. Looks like I'll have to find another investment instrument. Trust them without the bond,,,,,,, Yeah right.
Dec 21, 2011 7:11PM
Dont buy savings bonds, buy silver bars and coins for gifts.  Gold and Silver currency- been a "bubble" for 6000 years! Governments cant print it and it has no counter party risk. Governments go bust (Russia, Iceland, Greece), companies (MF global, bear sterns,) go bust but gold and silver last forever.
My daughter has bonds with a face value of $3100 (purchased for $1550) that she won in an essay contest when she was 15.  She is now 26 and they tell us they are only worth a little over $1900 after 11 years.  At this rate she will be 50 before they reach face value.  These bonds used to mature after a certain number of years, but not anymore.  It is all tied to the interest rate of the Fed.  They are a terrible investment now.  They should have given her the $1550 to invest elsewhere.  Plus she will eventually have to pay taxes on what they finally earn.  These were a great investment when I was growing up but not now.  I would never purchase a savings bond for my grandchildren.  Instead I'm going to open a 529 account for college and give them tax-free municipal bonds.  Better deal.
Dec 22, 2011 2:00AM

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.

Dec 21, 2011 8:24PM
   Given the government's finances we're going from "not worth the paper they're printed on" to "not worth the bits that store them".
Dec 21, 2011 7:32PM

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!   

Dec 21, 2011 9:16PM
Wireless, paperless, just give me the choice.  Charge an extra buck for the paper and handling!!  That will probably be more than the interest if the economy doesn't improve.
Dec 22, 2011 9:05AM
Plus, the government said by going "Paperless" it's going to save them $120 millions over the next 5 years, I think the government (Congress) is already looking at ways to spend that $120 millions on their pet projects.
Dec 21, 2011 7:55PM
Agreed with you chefdad, regarding the ease and access via computers.  However, I have been associated with a business that demonstrated to me that EVERYTHING one does on-line can be accessed by anyone with the criminal intent and techno skills.  It was very scary.  In regards to hacking, its not a matter of whether or not an individual will be victimized, but When.  The only protection one might have is by 'flying under the radar', that is, by being anonymous and moderate income person, not a celebrity or wealthy target.
Dec 21, 2011 8:43PM
they are sort of worthless, but was always a treat to give, made a lot of happy faces, now all you do is pay for air, the govt unplugs their computer, bang all bonds lost
Dec 22, 2011 8:54AM
I started buying saving bonds back in 1986 through payroll deduction, and everytime i got a raise, i brought a higher denomination.  So at the end of 1999, i stop buying them, so i accumulated 320 saving bonds one of them was a $10,000. I Bond.  So in July of 2010, i was about to move to the Philippines (to live out the rest of my life), so i cashed in all of my bonds at the bank and received over $86,000.00, in which $43,967.00 of that was interest. So, i used all of that money to buy my first ever house here in the Philippines.  So those saving bonds did great for me.
Dec 21, 2011 9:26PM
How can you cash one in if you actually don't have it  anymore ( was lost )
Dec 21, 2011 9:16PM
I cashed the ones I had in. Soon to be worth "less" then the ink used to print them. Never trust an electronic document!
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