The U.S. Department of the Treasury will stop selling paper savings bonds on January 1, 2012. Beginning on that date, the government will sell electronic savings bonds online only, a move it estimates will save American taxpayers more than $120 million in printing and mailing costs through 2016.
"Savings bonds are very much a part of this country's history and culture, and will remain a part of America's future, but in electronic form," Van Zeck, commissioner of the Bureau of Public Debt, said in announcing the change on July 13, 2011. "It's time for us to take a 1935 model and make it a 21st century investment tool."
The U.S. Treasury stopped the sale of paper savings bonds through traditional payroll savings plans on Dec. 31, 2010, as a way to encourage investors to purchase electronic savings bonds. Beginning in 2012 savings bonds will no long be available for purchase over the counter at banks, credit unions and other financial institutions.
How to Buy Savings Bonds Online
To buy savings bonds beginning 2012 investors must have access to the Internet and open an account with the U.S. Treasury's TreasuryDirect service, at www.treasurydirect.gov. Buying savings bonds online comes with a $25 fee.
You'll be asked for the type of account you wish to create - individual, business or organization, or estate or trust. You'll need you personal financial information including bank name, routine number, account number and taxpayer identification number.
"Through TreasuryDirect, investors have an easy and convenient way to purchase and manage their bonds free of charge," Zeck said. "Investors will no longer have to worry about misplacing, losing or storing paper savings bonds."
The fed has sold savings bonds through TreasuryDirect since 2002, but only about 11 percent of customers bought savings bonds using the online service at the time the Treasury announced the transition to electronic savings bonds.
Manage Savings Bonds Online
The U.S. Treasury will allow investors to buy, manage, and redeem Series EE and Series I electronic savings bonds through its website. It will also allow them to convert paper savings bonds to electronic savings bonds through what it calls "SmartExchange."
Customers can also purchase savings bonds as gifts and enroll in a payroll savings plan for buying electronic savings bonds.
If You Hold Paper Savings Bonds
The move to sell savings bonds online only will not effect holders of paper savings bonds. Americans will still be able to redeem them at banks after the transition.
Savings bonds that have not matured but have been lost, stolen or destroyed must electronic form after 2011.
History of Savings Bonds
Series EE savings bonds pay interest based on market rates for up to 30 years. The U.S. Government first introduced savings bonds in 1935 as a way to finance the federal government spending.
See also: National Debt Versus Federal Deficit
The U.S. Treasury will still make paper bonds for customers who use their tax refunds to purchase them. In 2010, the IRS received 22,520 tax returns requesting more than 99,000 savings bonds totaling $11,190,200.