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Goodbye Old Friend--U.S. Savings Bonds Go Paperless

Goodbye Old Friend--U.S. Savings Bonds Go Paperless

Stumped for a gift and plan to head to your credit union to purchase a U.S. savings bond for your niece or nephew’s birthday?  Before you make the trek, put down the car keys and keep reading--once the clock chimed midnight on January 1, 2012, U.S. savings bonds in paper form became history.

Today consumers can no longer purchase paper savings bonds through their credit union or bank. Instead of being able to slip an official looking, embossed bond into a birthday or graduation card, all purchases and possession must exist in cyber world. 

While the newest generation of savers may shrug at the news (and perhaps revel at the new convenience), those of us who grew up seeing the distinguished-looking savings bond peaking from our Christmas stocking or proudly stuffed inside a birthday card from grandma may feel a little tear well up on our eye.  Well, maybe not a tear but many will take note that an era has passed.

Joyce Harris, spokeswoman for the Treasury Department, acknowledges that many consumers may be somewhat saddened by the news. “There’s a lot of nostalgia behind it, and that’s a good thing,” she says. “But we have to move the program into the 21st century.”

Harris explains that there are a few reasons why savings bonds have gone paperless.  One reason surrounds the fact that like many industries, the Treasury Department is looking for ways to slash expenses.  The government estimates it will save approximately $120 million in printing, mailing and administrative costs over the next five years.

Second, Harris adds Series EE and I sales have been sluggish, which contributed to the decision.

In fact savings bond investments are down by 78%, even before the government reduced the maximum annual purchase amount from $30,000 to $5,000 four years ago. Although Americans  purchased savings bonds to the tune of $1.47 billion in 2011, that number is down considerably from $6.6 billion in 2001.

While the numbers have ebbed, Harris says that savings bond purchases make up approximately 1% of the nation’s $14 trillion debt.

Some Younger Consumers Are Feeling Sentimental

While one might think that Depression Era babies are the ones who hate seeing paper savings bonds go, instead it’s Gen X folks, now many middle aged, who are pretty bummed out. 

For example 31 year-old Justin Plokhooy says that he has enjoyed giving savings bonds as gifts. “Having them go away in paper form is a disappointment.  I always thought there was something really cool about them.” Plokhooy says that he leveraged his own savings bond collection given to him from relatives to purchase text books in college. Today he and his sister have been buying savings bonds for each other’s children. 

A Sacramento Bee reader commented on an article about savings bonds by saying that although receiving bonds has been a tradition, there are better ways to save. “I received savings bonds for every birthday and Christmas from my grandparents.  The ones that were purchased before I was 8 (1993) matured and I cashed them in when I was 18. When I was 25 none of the rest of them had matured. I looked up the interest rates on them and discovered that I could get a better interest rate if I cashed them in under value and placed them in a savings account.  Right now its just a better financial decision to use a savings account than to buy a savings bond.”

Although savings bonds have been sold at credit unions, credit union representatives say members are more interested in taking advantage of higher yielding investment products instead.

Keo Conner, Goldmark Federal Credit Union's ($27million, Attleboro, MA) business and community development specialist likened savings bonds to “1980’s shoulder pads” and the request to purchase a savings bond is very rare. "Every once in a blue moon we get a request.  And it's usually somebody in their 90s."

By Gina Ragusa
Published January 4, 2012
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