Ask Dr. Don By Don Taylor, Ph.D., CFA • Bankrate.com

U.S. Postal savings certificates

Dear Dr. Don,
I have a U.S. Postal Savings System Certificate of Deposit issued Dec. 10, 1949. It is a B series with a $2 face value. The interest rate is 2 percent per annum. What would it be worth today?
Kindest regards,
Len Look-up

Dear Len,
The value of your certificate lies more in its numismatic value than in the miracle of compound interest. The U.S. Postal Service stopped paying interest on the deposits in 1967, but even if it didn't, the value of $2 compounded at 2 percent annually for 52 years is only $5.60.

In researching my reply I found a deposit certificate from 1940 listed in a collector's catalog with an estimated value of $750 to $1,250. The particulars concerning your certificate, including its condition, will influence its value and it may be worth much less.

The following paragraphs describing the postal savings system are from History of the U.S. Postal Service 1775-1993 on the Postal Service's Web site:

"An Act of Congress on June 25, 1910, established a postal savings system in post offices, effective Jan. 1, 1911. The legislation aimed to get money out of hiding, attract the savings of immigrants accustomed to saving at post offices in their native countries, provide safe-depositories for people who had lost confidence in private banks, and furnish more convenient depositories for working people, since post offices were open from 8 a.m. to 6 p.m., six days a week.

On April 27, 1966, the Post Office Department stopped accepting deposits in existing accounts, refused to open new accounts, and, as the yearly anniversary date of existing accounts came up, cut off interest payments. When the system ended officially on July 1, 1967, about $60 million in unclaimed deposits of more than 600,000 depositors was turned over to the Treasury Department to be held in trust, without a time limitation.

Eventually, under a law of Aug. 13, 1971, the Treasury was authorized to turn over the money still on deposit to various states and jurisdictions, each sharing proportionately. Some money was kept on deposit for future claims, but under the Postal Savings System Statute of Limitations Act of July 13, 1984 (Public Law 98-359), no claims could be brought more than one year after enactment. Thus, no claims made after July 13, 1985, have been honored."

-- Posted: Jan. 4, 2002