U.S. phasing out paper savings bond
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The venerable U.S. savings bond, which has been issued in paper form since 1935, will soon become yet another casualty of the computer age.
As of Jan. 1, the U.S. Department of Treasury will no longer issue printed savings bonds through the traditional payroll savings bond purchase program.
Employees can still buy savings bonds through their employers by establishing a payroll direct deposit, but bonds purchased that way will be available only in electronic form online.
"We are basically trying to do more transactions electronically," said Joyce Harris, a Treasury Department spokeswoman. "It saves money and it's easier for savers. You can't lose the bonds if they are electronic."
For savers, it eliminates the risk of their investments potentially being destroyed by fires and natural disasters. For the government, it is less costly and more efficient to convert to an electronic bookkeeping system.
People who prefer to stash their paper bonds away for safe keeping in desk drawers and shoe boxes will still be able to buy them directly from banks and other financial institutions after Jan. 1, but those days also are numbered.
"It is a goal to someday do all securities electronically," Ms. Harris said. "But it's not happening at this moment."
More and more financial institutions are moving away from paper. Banks are beginning to charge customers a fee for receiving monthly statements in the mail and many stock brokers also give clients a break when they opt for electronic monthly statements.
Paper bonds will still retain their full value as investments, but they also will become relics of a bygone era. In the future, bond savers will need a computer, Internet access and a bank account.
To purchase savings bonds, investors will have to go online and register with Treasury Direct, which is the U.S. Treasury's Bureau of Public Debt's website for electronic EE bonds, I bonds and other marketable securities such as Treasury bills and notes.
Federal employees have already been required to convert to the new system. As of Sept. 30, paper savings bonds are no longer provided to federal workers enrolled in the payroll bond purchase program.
But fewer people are using the payroll deduction program anyway. The popularity of the bond savings program has declined about 60 percent over the past 10 years.
Ms. Harris said the Treasury issued 29 million pieces of paper to workers through the payroll savings program in 1999. By 2009, only 12 million pieces of paper were issued in the form of savings bonds.
"This is part of a larger initiative the Treasury announced in April to go green," Ms. Harris said, adding that the elimination of paper in distributing government checks and savings bonds will save the Treasury $400 million over the next five years.
Ms. Harris said the Treasury will save $50 million over the next five years by issuing savings bonds electronically.
Not all financial institutions offer printed savings bonds, but many still do.
Ms. Harris said people who want to cash in paper savings bonds that have matured can do so at financial institutions that participate in the savings bond program, or they can fill out a form and redeem them through the Treasury Department's Bureau of Public Debt.
That form can be downloaded at www.treasury.gov.
First Published October 16, 2010 12:00 am