Ready. Save. Buy.

By Lila Quintiliani, AFC ®
Military Saves Assistant Coordinator

Just like clockwork they would arrive each year – the little certificates announcing that my aunt had purchased another savings bond for my birthday.  A few weeks and a thank you note later (Auntie A was always a stickler for the niceties), and a crisp Series EE savings bond would arrive in the mail.  When my daughters were born a few years ago, the tradition continued. 

Savings Bond Stamp

My elderly aunt doesn’t believe in Barbies or “junk” as she calls it, but she does believe in preparing for the future.   Then this month, for my daughter’s seventh birthday, all we got in the mail was a card.  And that’s because the U.S Department of the Treasury has gone completely digital.  That’s right.  As of January 1, 2012, you can no longer walk in to your bank and purchase a bond; instead, you must establish an account at www.TreasuryDirect.gov and the bonds you buy will be paperless.

Savings bonds have a history reaching back to 1935, when President Roosevelt signed legislation creating the first “baby bond.” (Treasury Direct even has a neat interactive timeline on the history of the bond).  In the forties, War bonds and stamps were introduced.  The stamps allowed a nation of small-time savers, including children, to support the war effort for as little as a dime at a time.  Celebrities, presidents and even Bugs Bunny have hawked bonds.  Bonds didn’t make for an exciting gift when I was eight, but they sure as heck came in handy when I graduated from college and bought my first car.

Now as part of an “all-electronic initiative” that’s set to save the Treasury Department as much as $120 million over the next five years, if you want to buy yourself or someone else a bond, you must set up an account on www.TreasuryDirect.gov.  Fortunately, the Treasury Department has another new initiative called Ready.Save.Grow. that is supposed to guide you through the process and  offer “safe and convenient ways to help you to save.”
Determined to buy my two daughters a couple of Series I savings bonds (they currently have a pretty stout 3.06% rate of return and if used to finance education, the interest earnings may be excluded from income tax), I bravely waded through the TreasuryDirect site.  Here’s what I discovered along the way:

·    The new ReadySaveGrow site is more user friendly than Treasury Direct when you are first starting out.  Pay attention to the tutorials – they are there for a reason.  In order to open an account, you will need your social security number, your drivers’ license number, your bank account/routing number, and an address in the US.
·    If you want to buy a bond as a gift, it is essential that you read the instructions.  The process is not necessarily intuitive – in order to give a gift to a minor, both of you must have an account. And to set up the minor’s account, you will need their social security number. 
·    Once you purchase the bond, it will be delivered to your virtual “gift box” and then you can “deliver” it.  You can even print off certificates like the ones the banks used to have to send to the recipient.
·    Unlike the old EE series paper bonds, the bonds you buy on Treasury Direct are sold at full face value (so you will spend $50 to buy a $50 I series bond).  The minimum time to hold the bond is one year; it continues to earn interest for 30 years.  If you cash it out before the first 5 years are up, you forfeit the three most recent months’ interest.
·    The site also links to many other savings resources as well as a savings planner

It did take a little doing, but in less than half an hour, I was able to set up my account and two minor accounts for my girls.  A few minutes later, I purchased two savings bonds under the BuyDirect tab in my Treasury Direct account.  My aunt would be proud.  And she recently set up an email account so who knows?  Maybe one of these days I will walk her through setting up her very own TreasuryDirect account.