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Frequently Asked Questions about the End of the Over-the-Counter Sales of Paper Savings Bonds

What is changing?

As of January 1, 2012, the U.S. Department of Treasury ended sales of paper Series EE and I savings bonds through over-the-counter channels, including financial institutions and mail-in orders. Purchase applications were accepted through December 31, 2011. Savings bonds will remain available for purchase as electronic issues in TreasuryDirect.

Paper savings bonds are costly to produce and maintain. Ending sales of paper bonds will save an estimated $70 million over the next five years and is a continuation of Treasury's all-electronic initiative announced in April 2010.

Why is Treasury ending sales of paper savings bonds?

Ending sales of paper savings bonds is a continuation of Treasury's all-electronic effort announced in April 2010. The initiative will increase electronic transactions to reduce costs and enhance customer service.

Paper savings bonds are costly to produce and maintain. There are costs to print, ship, and store bond stock; to inscribe and mail bonds; and to provide lobby services through financial institutions.

Technology makes it possible for us to sell and maintain savings bonds and other Treasury securities electronically in TreasuryDirect at a reduced expense to taxpayers.

When will the paper bond program end?

Over-the-counter sales of paper savings bonds ended December 31, 2011. Final applications must be received by December 31, 2011.

Does this change end all sales of paper bonds?

When the Treasury Department stopped selling savings bonds through over-the-counter channels, it effectively ended the paper savings bond program, with one exception. In 2010, a new Tax Time Bond Program was introduced making it possible for tax filers to purchase paper Series I savings bonds with their tax refunds. That purchase option will remain available. For more information, visit www.treasurydirect.gov/indiv/research/faq/faq_irstaxfeature.htm.

What happens to the paper bonds I already own?

The bonds you own are valid issues of the U.S. Treasury and will earn interest for 30 years or until redeemed. Paper bonds can be converted to electronic savings bonds in TreasuryDirect using a program called SmartExchange®. There's no charge to convert paper bonds. They won't lose any of the interest earned, and they retain their original issue dates and interest rate terms. For more information, visit http://www.treasurydirect.gov/indiv/research/indepth/smartexchangeinfo.htm

I've been buying paper bonds to pay future college expenses. Will that program continue?

You will not be able to purchase paper bonds; however, the same education tax exclusion rules apply to electronic savings bonds in TreasuryDirect, so you could continue to save for that purpose by opening a TreasuryDirect account. For more information on education bonds see http://www.treasurydirect.gov/indiv/planning/plan_education.htm.

I like to give savings bonds as gifts. Can I do that with TreasuryDirect?

TreasuryDirect does have a gift bond feature so you can buy electronic savings bonds as gifts. The recipient of the gift must have a TreasuryDirect account (or be named on a minor linked account if under 18 years old) to receive the gift. You can hold bonds in the Gift Box area of your TreasuryDirect account until the person you want to deliver it to opens an account.

When you buy savings bonds as gifts, you must hold them in your TreasuryDirect account for at least five business days before you can deliver them to the gift recipient. The five-day hold protects Treasury against loss by ensuring the ACH debit has been successfully completed before the funds can be moved.

The gift option is available only to individual account holders, not businesses or organizations, and is limited to savings bond purchases. So, you can't give marketable securities as gifts. For more information on gift bonds in TreasuryDirect see http://www.treasurydirect.gov/indiv/planning/plan_gifts.htm

What are the advantages of TreasuryDirect?

TreasuryDirect is an easy way for you to save on a regular basis by purchasing electronic Treasury securities. With TreasuryDirect:

  • You can buy, manage, and redeem Treasury securities online 24/7, all from the convenience of home, work, or wherever you have secure Internet access.
  • You can diversify your holdings since TreasuryDirect also offers Treasury bills, notes, bonds, and TIPS.
  • You can establish multiple registrations in one account.
  • You can set up a simple payroll savings plan to automatically invest in savings bonds.
  • You can schedule recurring purchases for savings bonds and marketable securities.
  • Savings bonds purchases are generally added to the account in just one business day.
  • Since the securities are electronic, there is no paper to lose, nor do you need to go to your local bank to redeem them.
  • When the funds are needed, and after the minimum holding period has been reached, you can redeem part or all of your savings bond(s). The payment will be deposited to the checking or savings account you choose. Redemption funds should reach your bank or credit union in just one business day.
  • Details such as issue date and current value are tracked for you.
  • You can even set up accounts for minor children and custom accounts for specific purposes such as education or vacations.
  • A summary of account activity, including recent purchases, payments, and account balance, is always available for you online. You can print a copy of any page in your TreasuryDirect account for your personal files.

How long does it take to open a TreasuryDirect account?

Setting up an online account is easy and can be accomplished in about 10 minutes.

How long will it take to verify my information?

Your personal information will be processed in less than a minute after your TreasuryDirect account information has been submitted.

What if you are unable to verify my information?

If we are unable to verify your information, we will offer you the opportunity to complete a convenient, printable form to verify your identity. Just follow the instructions on the form and submit it to the address provided.

To use TreasuryDirect, do I need to have a bank account, Internet access, and an e-mail account?

Yes. You will need to have an account at a financial institution to receive direct deposit payments and as a potential funding source for purchases. You also will need Internet access to view and use your account. Finally, an e-mail address is necessary so that you can receive important messages about your account.

Why do I have to enter a bank or credit union account when I open my TreasuryDirect account?

In TreasuryDirect, transactions occur electronically. When you redeem a security, TreasuryDirect will deposit the payment to the bank or credit union account you select. You can also request that your bank account be used as a source of funds to pay for securities purchases.

Is it safe to send all of this information over the Internet?

Yes. The TreasuryDirect system uses several features to ensure the safety of the information you provide and the transactions you perform.For example:

  • Secure Sockets Layer (SSL) Technology: TreasuryDirect uses SSL which is a common protocol for sending payment information securely over the Internet. SSL works by using a private, mathematical key to encrypt (or scramble) data transferred between your web browser and the website you're visiting.
  • Virtual Keyboard: TreasuryDirect uses a virtual keyboard to help protect your password.
  • Password: You choose your own password and can change it any time.
  • Personalized image and caption: You select an image and caption that will help you identify the account as yours when you login.
  • Customer Hold: As an added security feature, TreasuryDirect allows you to place a hold on your account if you feel your account access information has been compromised.
  • Paper Forms: For your protection, changes to your bank information and certain security transfers require the submission of a signed and certified paper form.

Since I won't receive a paper bond, how will I know the purchase was made?

You can view your account purchases online 24/7.

What is the smallest savings bond denomination I can buy in TreasuryDirect?

Electronic savings bonds are not sold by denomination. The minimum purchase amount for a savings bond in TreasuryDirect is $25 and the maximum is $10,000. In between, you can purchase any amount down to the penny. There is a $10,000 annual limit per savings bond series per person.

If I want to buy Treasury bills, notes, bonds or TIPS is there a minimum purchase limit?

Yes. The minimum purchase amount for a Treasury bill, note, bond or TIPS is $100. There is no annual limit, but you can only buy $5 million per auction. To learn more, go to www.treasurydirect.gov/indiv/research/indepth/auctions/res_auctions_faq.htm.

What is the issue date established on savings bonds I buy in TreasuryDirect?

Savings bonds purchased in TreasuryDirect are posted to your account one business day after they are purchased. The issue date of the savings bond is the first day of the month in which the savings bond is posted.

What is the issue date on Treasury bills, notes, bonds, and TIPS?

The issue date, and the maturity date, of a Treasury bill, note, bond, or TIPS is determined by the type of security and whether the current offering is an original issue or a reopening. To learn more about these securities, their terms and conditions, go to www.treasurydirect.gov/indiv/research/indepth/auctions/res_auctions_faq.htm.

Can I put my paper savings bonds in TreasuryDirect?

Yes. You can trade your paper savings bonds for electronic bonds in TreasuryDirect using a program called SmartExchange. With SmartExchange, you can convert Series E, EE, and I bonds to electronic securities and enjoy all the benefits of having online 24-hour access to manage your holdings. There's no charge to convert paper bonds. They won't lose any of the interest earned, and they retain their original issue dates and interest rate terms. For more information on SmartExchange, visit: http://www.treasurydirect.gov/indiv/research/indepth/smartexchangeinfo.htm

Will the annual purchase limit for savings bonds in TreasuryDirect increase since paper bonds will no longer be available?

As of January 4, 2012, the annual (calendar year) purchase limit applying to electronic Series EE and Series I savings bonds is $10,000 for each series. The limit is applied per Social Security Number (SSN) or Taxpayer Identification Number (TIN). Each calendar year, an investor may purchase $10,000 of each type of electronc savings bond for a total of $20,000. For paper Series I Savings Bonds purchased with your IRS tax refund, the purchase limit is $5,000.

Conversions of paper bonds into TreasuryDirect do not count towards your annual purchase limit. Bonds you receive as gifts are considered as part of your annual limit in the year they are received. For more information please visit www.treasurydirect.gov.

What will happen to Patriot Bonds once paper bonds are no longer available?

When Treasury stops selling paper savings bonds through over-the-counter channels it will end the practice of inscribing "Patriot Bond" on the Series EE bonds purchased through financial institutions. Since TreasuryDirect is an all electronic system there is no comparable or practical way to continue using this designation.

Patriot Bonds were offered so Americans could show visible support for our nation's anti-terrorism efforts. The bonds themselves are identical in every other way to paper EE Bonds and the proceeds are deposited into the general fund. Since Series EE bonds are available in TreasuryDirect, you can continue to show your support by purchasing them electronically.