Image by M. Kelley via Flickr
Starting January 1, 2012, you will no longer be able to go into the bank and purchase a paper savings bond, according to a blog post by Ann Carrns titled “Goodbye, Paper Savings Bonds,” which can be found on the New York Times Blog, Bucks.
You will still be able to buy electronic versions of savings bonds via the Bureau of Public Debt’s web-based purchasing system Treasury Direct. The Bureau of Public Debt has decided to get rid of paper bonds in order to save costs. According to the bureau, this move will save $70 million in taxpayer money over a five year time span.
Many are afraid this move will infuriate the older population, who aren’t as technology savvy as younger generations. According to the article, users will have to create an account on the website in order to purchase a savings bond. Once it’s purchased, the bond will remain in an “online gift box” until the recipient is 18 and creates an online account. However, if the child’s parents have a Treasury Direct account, they can establish a linked custodial account in the child’s name to hold the bond. When the recipient turns 18, the joint account can be converted to a solo account.
In the article, Mckayla Braden, a spokeswomen for the bureau, said the demand for savings bonds have been in decline. As you can see below, the amount of savings bonds purchased has significantly declined in the past 10 years.
- 2001- approximately $6 billion in savings bonds were purchased
- 2010 – approximately $2 billion in savings bonds were purchased
- October 1, 2010 – June 30, 2011 – $1.2 billion in savings bonds were purchased
Braden didn’t say how many bonds were purchased by older citizens; however, she did say, “In my experience, older people definitely bought bonds over-the-counter for children and grandchildren, and put it in their safety deposit boxes (Article).”
On the other hand, some believe eliminating paper bonds will take away the hassle of having to keep track of the paper version. No more digging through drawers or wondering where you put the bond; instead, it will be available with the click of a mouse.
However, according to the article, one feature Treasury Direct offers is the option to print or download a gift certificate stating the amount of the bond and what occasion it was purchased for. So it technically doesn’t eliminate “paper” aspect altogether.
This transition from paper bonds to electronic bonds will not affect current bonds that have already been purchased. These paper bonds can still be redeemed at the bank.
My guess is although people will no longer be able to purchase paper bonds; they will instead print off the gift certificate and insert it in a card. Therefore, the cost of paper is simply getting put on the consumer instead of the organization. However, I do think it is a good idea to have an electronic version in addition to a paper certificate just in case it was to get lost; it will always be available online.
This move will definitely alienate the older population and may cause them to stop buying bonds altogether because they don’t know how to use computers. This may hurt sales in the short term; however, only time will tell if the electronic version of the savings bond will catch on.
What are your thoughts on the transition from paper to electronic savings bonds?