Savings bonds sales go online
- By Diane Frank
- May 06, 2003
The Treasury Department has made the most popular savings bonds available for sale online, a step toward potentially saving the government millions of dollars, officials said.
Beginning May 5, people can buy EE Series bonds online via TreasuryDirect.gov by debiting a savings or checking account. The interest the bond earns will be paid directly to the account when it is redeemed online.
"Eventually we can stop issuing paper and convert standing paper bonds into electronic form," said Peter Fisher, undersecretary for domestic finance.
Treasury must perform several back-end steps before all bonds can be sold electronically, including updating the process to convert existing paper bonds to electronic format and adding the ability to pay for bonds via automatic payroll deductions. Those steps should be done by the end of 2004, Fisher said.
The option to purchase paper bonds in person will not be phased out until the department determines that enough people are aware of the Internet option. Treasury will launch a major public awareness campaign this summer, and once internal surveys show that at least 65 percent of current bond holders are aware of the option, officials will announce that they will stop issuing paper, Fisher said.
"We are doing this because of the huge cost of managing the embedded base of paper," Fisher said.
Because of the cost — $154 million annually, significantly more than any other program run by the Bureau of Public Debt — paper savings bonds are simply not an effective way to raise money for the federal government, he said.
In order to continue offering savings bonds to the public, "we're going to have to move to all electronic," said Donald Hammond, Treasury fiscal assistant secretary.
Treasury opened the TreasuryDirect program with the I Series bonds in October 2002. Already, 19,000 people have accounts in the program, holding more than $112 million in electronic I bonds. That is still a small percentage of the total — with more than $195 billion in bonds outstanding — but it is enough interest to demonstrate that adding the EE Series would be worthwhile, Fisher said.
Treasury has requested no additional funding in order to move the savings bonds online. All of the enhancements are being developed in-house with existing information technology resources and personnel, Fisher said.
Credit card purchases of savings bonds will be phased out by the end of the year because of the additional cost to the department for offering that option.
Officials also are expanding work with libraries, employers and banks to make the online purchase option available to people who do not have home access to the Internet, Fisher said.