How to securely convert paper bonds to electronic bonds

From taking out a loan to investing in stocks and bonds, most money moves can be done online nowadays. If you're like me and still have paper savings bonds, you can make your life easier and better protect your funds by converting them to electronic form.

Traditionally issued in physical form, the U.S. Treasury offers two types of savings bonds, series I bonds and series EE bonds. The main difference is that EE bonds have a fixed interest rate while I bonds earn a rate that can change every six months. The digitization process is the same for both types of bonds and requires a TreasuryDirect account.

Here's a step-by-step breakdown of how I converted my paper bonds to digital ones using TreasuryDirect, and you can too.

One of the biggest benefits of converting paper bonds to electronic bonds is increased safety. Unlike paper bonds, electronic bonds don't need to be physically safeguarded, so they can't be lost, stolen or destroyed.

Another benefit of electronic bonds is that you'll automatically get paid once they mature. With physical bonds, you have to track when they stop earning interest and then take the bonds to a bank to cash them in. Electronic bonds are also more convenient as you can manage your bonds whenever and wherever you'd like — you only need access to a computer.

Just note that once you convert bonds from paper to electronic format, you can not convert them back.

Create a TresuryDirect Account

The first step to converting my paper bonds to electronic bonds was to create an account on TreasuryDirect.gov. I needed to provide some basic information such as my name, date of birth and address, as well as some more personal details like my Tax ID or Social Security number and my banking information, allowing the bonds to be automatically redeemed upon maturity.

Establish a Conversion Linked Account

Once my account was created I navigated to the ManageDirect tab of their navigation and selected "Establish a Conversion Linked Account" to have my account be eligible for bond conversions.

Create registration lists for each bond registration type

From there I had to create registration lists for each type of bond I had. For example, I had four different types of bonds, one where I was the only owner, one with my mother listed as a co-owner, two with my father listed as a co-owner, and one that was payable on death (POD) which meant I had to create four separate registration lists.

For this step, you'll need the Tax ID or Social Security Number for both the owner and the Second-Name Registrant of the treasuries, who are often the co-owner or beneficiary.

Add each bond to the correct registration list given its type

Once the registration lists were created, I could then add each bond to the correct registration list based on its type. I selected the correct series label (EE or I) and denomination, entered the serial number and issue date of each bond and then added them to my "cart," which is essentially a holding spot for the bonds until they are converted. The cart is automatically saved with each bond addition, and you can log out and return to add more bonds whenever you would like before proceeding to the next step.

Create a manifest that contains a list of your bond information

Once I had added all the bonds to my cart I then clicked "create a manifest" which generated a numbered manifest of the list of bonds that I had in my cart. From there I could print and sign the manifest, make a copy for my records, and mail both the created manifest with my bonds to the address shown on the form.

Periodically check the status of your bonds

Once this is all complete, you just have to sit back and relax. You won't be notified when the conversion process is complete, so it's important to check the status regularly, which will provide updates as to the progress phase your bonds are in.

Overall, my experience converting my paper bonds to electronic ones was relatively positive with a few bumps along the way. The website looks very simple which helps for navigational purposes, but many times if I clicked on a page and then wanted to go back, it would sign me out of my account and I'd have to go through the sign-in process all over again. Some information, such as the social security numbers of co-owners of the bonds, took longer to get my hands on but the process went smoothly once I had all the necessary info.

Most savings bonds are now electronic. Paper bonds can only be purchased as part of your annual tax return.

If you're looking to buy individual government bonds, you can do so directly through TreasuryDirect.gov. Buying individual treasuries is often recommended for more experienced investors as it requires a decent amount of knowledge and information around pricing, risk tolerance, diversification, investing timeline, overall financial goals and more.

You can also get access to treasuries through a brokerage account via bond funds and bond exchange-traded funds (ETFs). These function similarly to mutual funds and ETFs and allow you to invest in a mix of bonds. Brokerages also often offer educational resources that can help you make more informed investment decisions.

Both Ally Invest as well as Wealthfront offer ways to invest in treasuries. Ally offers a $0 minimum deposit for Self-Directed Trading as well as access to knowledge about investment strategies and market trends. You can also utilize a robo-advisor, such as Wealthfront, which can help you create a personalized portfolio and will often include a mix of bonds among other assets based on your personal financial goals.

The added safety and security of electronic bonds were the main reasons I chose to convert my paper bonds. If you have any older savings bonds that you're thinking about converting, the process is relatively straightforward and you'll no longer have to worry about keeping them safe or tracking their maturity date.

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