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Savings Bonds To Go Paperless
The old dusty savings bond found in grandpa's shoebox to the delight of the finder will soon become a thing of the past as the U.S. Treasury works towards a paperless savings bond industry.
During the next several years, the nation will be transitioning to an electronic system, but some consumers groups and financial institutions aren't happy about it. The new system will require that people who wish to purchase a savings bond have computer and Internet access. They'll need to get online with Treasury Direct to purchase the bonds, and soon those who buy the bonds will have to pay taxes when the bonds mature, instead of when they are cashed. Treasury will know when a bond matures and will automatically deposit proceeds into the bond holder's bank account.
The reason for the transition is economic, and Treasury is bringing it into reality slowly - over the course of the next several years. Still, the National Association of Federal Credit Unions has written to Treasury urging them to keep paper bonds alive for at least five years to allow for a smoother transition. Opponents to the all- electronic bonds say that the customer base for savings bonds is older, and many of those customers don't like banking online. Many also hold the bonds because they want to delay paying taxes.
In a second move to save money, Treasury Direct confirmed that it stopped accepting credit card payments for bonds as of December 31, 2003. After that date, all purchases will need to be made by debit.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 12, 2/04
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