Americans who want to buy a U.S. Savings Bond after Dec. 31 will need two things: at least $25 and an Internet connection.
The Treasury Department is scheduled to announce today that for the first time in 76 years, paper Savings Bonds will no longer be sold at banks and credit unions. Investors who want to buy Savings Bonds after Dec. 31 will need to purchase them electronically through TreasuryDirect, a Web-based program offered by the Treasury's Bureau of Public Debt.
The shift from paper to electronic Savings Bonds will save the government $70 million over the next five years, Public Debt Commissioner Van Zeck says. "That's a real economic advantage to Treasury in these times when we really need to look at the cost of government programs."
Treasury has offered Savings Bonds through TreasuryDirect since 2002, but acceptance has been slow. Of the $1.2 billion in Savings Bonds purchased from October 2010 to June 30, 2011, 11 percent were bought through TreasuryDirect.
Treasury hopes the phaseout of paper will give savers the nudge they need to embrace electronic Savings Bonds, Zeck says. Electronic Savings Bonds are less likely to be misplaced, he says, and are automatically redeemed when they mature. Treasury estimates that more than $16 billion in unredeemed Savings Bonds are no longer earning interest.
Still, millions of Americans don't have Internet access. Only 44 percent of Americans age 65-73 have broadband at home, a 2010 survey by the Pew Research Center says. For Americans 74 and older, the percentage is 20 percent.
The digital divide is "something we struggled with," Zeck says. "It reflects why we haven't made a decision to end paper Savings Bonds until now."
The change won't affect outstanding paper Savings Bonds, Zeck says. They'll continue to earn interest until maturity and can be redeemed at financial institutions. Investors whose paper bonds are lost or destroyed can have them reissued in paper or electronic form.
Even after Jan. 1, paper Savings Bonds won't disappear. Treasury will provide paper bonds to investors who buy them with their tax refund. For more information about electronic Savings Bonds, along with information on how to convert paper bonds to electronic form, go to www.TreasuryDirect.gov.