Buying savings bonds in the digital world isn’t so easy

11/22/2013 8:00 AM

11/22/2013 3:38 PM

The federal health care marketplace isn’t the only government website that can generate hair-yanking moments. Try buying U.S. savings bonds in the digital domain.

The holiday season is a peak period for parents and grandparents to purchase bonds as gifts for children. But if it’s been a while since your last bond gift, be prepared to spend some time going through the purchasing process on the Treasury Department’s website at


Buying savings bonds as a gift used to be easy. You’d go to the bank, fill out a form and hand over the money. Within a couple of weeks, a colorful paper certificate for your child or grandchild would be in the mail.

But in January 2012, the Treasury Department ended the traditional sales method and switched to an electronic format to control costs.

The TreasuryDirect website has boxes to click on and identity theft security hoops to jump through. While technology was supposed to improve the user experience, I found it to be more complicated and time consuming than the old way. In fairness to the Treasury, bond buyers won’t be wasting hours on end to work through the system, but figure on spending about a half hour, plus repeat visits to the website.

If you’re preparing to buy a stocking stuffer from Uncle Sam, I recommend first checking out a video clip at TreasuryDirect and reading the answers to frequently asked questions. That will help you get organized.

First-time users on TreasuryDirect need to create an electronic account. You’ll need to provide your Social Security number, an email address and checking or savings account and routing numbers. Carefully type in the information and jot down the answers to the security questions so you won’t forget.

Since you’re purchasing a gift, the child will also need a TreasuryDirect account before the bond can be delivered electronically. A parent or legal guardian will need to open the account for a minor under the age of 18.

Watch for the “gift box’ function on the electronic application. This allows you to buy savings bonds for someone else and keep the bonds in your account as a placeholder until you’re ready to deliver the gift. You must hold the bonds in your account at least five days so funds can transfer from your bank account.

To finish the gift process, you’ll need the child’s full legal name, Social Security number and TreasuryDirect account number. You’ll also need the parent’s Social Security number if you want the account listed in two names.

While I understand the government’s desire to automate the process and eliminate all the paper, I’m also sympathetic to elderly buyers who struggle with technology or don’t have computer access. And face it, grandparents love savings bonds.

As for the investment itself, savings bonds remain a safe, long-term way to help fund college education, although the securities have lost some of their luster in this low interest rate environment.

Series EE bonds now pay a fixed rate of 0.10 percent for up to 30 years. A new Series I bond, which is adjusted for inflation, is now paying 1.38 percent. Its rate changes every six months to track inflation.

Both types of bonds can be purchased for a minimum of $25 up to $10,000. Rates change twice a year — May 1 and Nov. 1.

The Treasury Department will send your youngster a gift notification with your personalized message, but it’s not the same as receiving the old certificates with the presidential images of Washington or Jefferson. So you’ll need to be creative with the packaging. With savings bonds, it’s all in the delivery.

Next week: More financial gifts for the holidays.

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