WASHINGTON – The Bureau of the Public Debt announced today that as of January 1, 2012 , paper savings bonds will no longer be sold at financial institutions. This action, which supports the U.S. Department of the Treasury's goal to increase the number of electronic transactions with citizens and businesses, will save American taxpayers approximately $70 million over the first five years.
But savings bonds, introduced in 1935, are not going away. Electronic savings bonds in Series EE and I will remain available through purchase in TreasuryDirect®, a secure, web-based system operated by Public Debt – where investors have been purchasing savings bonds, available 24/7, since 2002.
For more information about the elimination of paper savings bonds and how to enroll in TreasuryDirect, visit www.treasurydirect.gov .
There are several reasons why people buy Savings Bonds. Often safety is cited as a primary reason. Savings Bonds are backed by the full faith and credit of the United States Government, therefore, the principal and interest will never be lost due to changes in the financial markets.
Savings Bonds are also free from ALL state and local income taxes. You can also defer federal income taxes on the earnings if you wait until the bond reaches final maturity or when you cash it in. You can invest as little as $25 so it is an easy way to save. Some Savings Bonds are even entirely Federal Income Tax Free if used for Educational Purposes.
I Bonds are a low-risk, liquid savings product. While you own them they earn interest and protect you from inflation. Once sold and redeemed solely as a paper security, they are now also available in electronic form.
If you redeem I Bonds within the first 5 years, you'll forfeit the 3 most recent months' interest; after 5 years, you won't be penalized.
EE Bonds are reliable, low-risk government-backed savings products that you can use toward financing education, supplemental retirement income, birthday and graduation gifts, and other special events. Series EE Bonds purchased on or after May 1, 2005, earn a fixed rate of return, letting you know what the bonds are worth at all times.
Beginning with Bonds purchased in 1990, the interest earned on Series EE Savings Bonds can be excluded from Federal Income Tax if you pay tuition and fees at colleges, universities, and qualified technical schools during the same year the Bonds are cashed. The exclusion applies to the educational expenses for yourself, your spouse, or any dependent.
Series EE Bonds also offer these savings incentives:
For more information about U.S. Savings Bonds visit Treasury Direct .
For additional information call Member Services:
1-800-272-6003 x 1477 (or Option 2)