Why Buying Savings Bonds Is Likely to Flummox Grandma
Saving money for nieces, nephews and grandkids used to be as simple as showing up at the bank to buy a U.S. Savings Bond.
But now that you can't buy bonds at banks, some fiscally focused grandparents aren't going to be happy.
"It's just not easy to give an electronic bond," said Mckayla Braden, a spokeswoman for the U.S. Treasury's Bureau of Public Debt.
Sure, people are buying all sorts of gifts online, fairly painlessly. But trust me, a Savings Bond isn't in the quick-and-easy category.
This is the first holiday season that paper U.S. Savings Bonds aren't being sold at banks. The traditional sale of paper bonds was basically eliminated last January.
Savers must go through a complicated online system to buy digital bonds.
Sticking points: You must open an online account — and on top of that actually make sure the recipient takes the time to set up a TreasuryDirect account, too. Parents will need to set up TreasuryDirect minor-linked accounts for each child under age 18.
Many folks are simply frustrated. "They're saying, 'I don't think so, ' " said Daniel Pederson, who blogs about Savings Bond issues at The Savings Bond Informer.
In fiscal 2012, savers bought $1.9 billion in Savings Bonds, including digital and paper bonds. Paper bonds totaled $1.4 billion.
Is it worth it?
One girlfriend who is generous with her extended family told me that she found the Savings Bond online system to be a pain. Young mothers in her family took weeks to set up a child's account. Eventually, it worked out.
"It's more complicated than just dropping into their bank," Braden acknowledged.
There isn't a lot of bang for the bond, either.
A new Series EE Savings Bond bought now through April 30 has a fixed rate of 0.2 percent.
A new Series I Savings Bond, which is indexed for inflation, has a six-month rate of 1.76 percent. Series I Savings Bond rates can adjust every six months after you buy the bond. The rate for I Bonds is based on inflation as measured by the consumer price index for all urban consumers.
Rates for Savings Bonds are announced May 1 and Nov. 1 each year.
If you want to buy Savings Bonds, the Treasury has a tip sheet and a video at treasurydirect.gov/readysavegrow.
To test out the system — and give some cash to little ones — I asked my niece if she'd first set up an account for her son, Carson, and her baby daughter, Penny. I sent her a link to treasurydirect.gov/readysavegrow.
My niece said it took her roughly five minutes to set up. "Pretty easy," she said.
After talking with my niece, I went to www.treasurydirect.gov, and it took me 23 minutes to set up my account and buy one I Bond for myself.
To buy a bond online, you'd need your Social Security number, e-mail address and bank account and the bank's routing number. You also need your driver's license number.
It can take time to carefully type in numbers, write down answers for three security questions, select a personalized image and caption, and retrieve two e-mails from Treasury for the account number and one-time password.
If you're buying a bond online as a gift, you'd need the recipient's Social Security number, too.
When you log into your account, there is a "Purchase Express" option. Red letters on this feature say: "NOT for gift bond purchases."
How do you buy a gift bond? I dug for the Treasury's tip sheet, which was useful.
Watch that "Add Registration" line near the top. You must add the registration of the child. But then, you also must use a scroll-down on the top bar to make sure the registration is locked in for that next purchase.
You need that child's Social Security number and the parent's Social Security number if you want the bonds in two names.
Eventually, I registered the two $25 bonds for my niece's children. I spent about 45 minutes, not including some breaks to clear my mind.
Once, about 12 years ago, I made a gingerbread house from scratch. The bond thing wasn't quite that bad. But I cannot see many people asking for this recipe, either.