Electronic U.S. Savings Bonds–Say Goodbye to Paper

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Paper Savings BondAs of today, U.S. savings bonds have gone digital. Paper savings bonds are history.

I’m get a bit nostalgic when it comes to paper bonds. There’s just something comforting in holding physical evidence of your investment. And the designs of paper bonds over the years have been quite impressive. So before we get to how and where to buy electronic U.S. Savings Bonds, here are a few bonds for the memory books:

1946_series-e

1952_series-h

1980_series-hh

Treasury Direct has put together a great looking timeline of the history of the U.S. Savings Bond worth checking out.

How to Buy Electronic Savings Bonds

The place to buy U.S. Savings Bonds is TreasuryDirect.gov. You can open an account online in minutes (online application page). With a Treasury Direct account, you can invest in the following:

  • Treasury Bills: Short term U.S. debt with terms of 4, 13, 26 or 52-weeks. Bills are sold at a discount from the face value. At the end of the term, an investor receives the face value.
  • Treasury Notes: Also called T-notes, they are issued in terms of 2, 3, 5, 7, and 10 years. T-notes pay interest every six months until they mature. Notes can be auctioned at, above, or below face value.
  • Treasury Bonds: All bonds have 30-year terms, pay interest every six months, and return the face value of the bond at maturity.
  • TIPS: Treasury Inflation-Protected Securities adjust with the Consumer Price Index. When the CPI rises with inflation, the principal of a TIPS increases. When the CPI drops, the principal decreases.
  • EE Bonds: As Treasury Direct describes, EE bonds are “low-risk government-backed savings products that you can use toward financing education, supplemental retirement income, birthday and graduation gifts, and other special events.”
  • I Bonds: Like TIPS, I Bonds protect against inflation by indexing a portion of the interest rate to CPI. There are also some tax advantages to I Bonds over TIPS.

There are several ways to purchase bonds from Treasury Direct. Of course, once you create an account you can begin investing. But Treasury Direct offers several purchasing options you may not know about.

SmartExchange: If you own paper bonds and want to exchange them for an electronic bond, Treasury Direct offers SmartExchange.

Payroll Savings Plan: You can set up direct deposit from your employer. Called the Payroll Savings Plan, you can have a set amount of money directed to your Treasury Direct account for automatic investing.

Gifts: You can buy bonds as gifts through Treasury Direct (details here). Treasury Direct will keep a record of all of your gift purchases, and they offer gift certificates so you have something to actually give as a gift.

Minor Linked Accounts: If you want to buy bonds for your children, grandchildren, or other minors, you can create a minor linked account.

Published or Updated: January 1, 2012
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Rob – I too am having a hard time accepting electronic bonds over paper ones. I don’t know why. All my other investing is done electronically – I’ve never actually held a share of stock! Perhaps its because that’s how I grew up with them. Those and CD’s – I still can’t get use to buying music digitally.

  2. I see why they made the switch to digital, but I don’t particularly like it. I purchase bonds every Christmas for my nieces. I like having something tangible to give them. The process for buying them online is not very user friendly. I might be re-examining what I am doing for gifts.

  3. I currently hold many paper I and EE series bonds and wished they were stored electronically. My wish has not come true! I wonder if they will give us an option to convert already purchased paper bonds to electronic…

  4. Denisse says:

    You can still purchase paper bonds directly from your tax refund (Form 8888). Just fill out the form at tax time and you can even gift directly from the form without needing the giftees social. Tax Time Bonds are Series I and are currently at a rate of 3.1%.

  5. JP Simlo says:

    My dad is in his 80s and has always bought bonds for his grandchildren. I know that will stop now as he does not have a computer. I will stop using bonds for gifts and my investments as I won’t open a Treasury Account and most of the kids I give bonds to do not have parents that have Treasury Accounts.

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