savings

Should you store savings bonds online?

White piggy bank standing on silver keyboard, top view
Highlights
  • People who've received bonds as gifts tend to forget about them.
  • TreasuryDirect's security system is much stronger than your bank's.
  • Forget walking into a Treasury office for help. You'll have to call.

If you put them in a drawer or even a safety-deposit box, they're easily forgotten. The two savings bonds currently sold -- EE and I -- mature in 30 years. So, it's easy to forget their whereabouts, and sometimes heirs can't locate them. After all, billions of dollars in matured savings bonds, which don't earn interest, haven't been redeemed yet, according to the Treasury Department.

The best answer, say experts, is storing your savings bonds electronically via TreasuryDirect. Banks and brokerage firms aren't an option. They can't hold savings bonds.

"For investors, TreasuryDirect makes more sense for storage than having paper versions," says Tom Adams, author of "Savings Bond Advisor," who stores his savings bonds at TreasuryDirect. "People who've gotten them as gifts tend to forget about them. They go in a drawer or safety-deposit box and they're out of sight."

Adams admits that TreasuryDirect's electronic storage program has a key downside though. Savings-bond holders don't receive quarterly -- or even yearly -- statements, such as banks might issue. But he also believes there are some strong upsides. They include TreasuryDirect's ease of use, solid security and no-fee purchases.

Joyce Harris, a spokeswoman with the Treasury's Bureau of the Public Debt agrees. "With TreasuryDirect, there's less chance of losing savings bonds," she says. "They're for anyone, any age. We don't see any downside."

Here's a rundown of the pros and cons.

Pros

Rock-solid security. TreasuryDirect's security system is much stronger than your bank's, says Adams. Layers of protection include user names and passwords to input, along with security codes on a plastic card that the Treasury sends you. "Some people find the security hurdles difficult," says Adams.

He adds that the site's security is important: The Treasury doesn't offer protection for unauthorized fund transfers. Conversely, banks do. So, the bank must insure your protection, adds Adams.

Ease of use. Savings bonds are bought and redeemed electronically at TreasuryDirect, unlike the paper versions bought at local banks. "It's quite easy to invest and redeem there," says Adams. "To redeem, just log onto your account and see what you want to sell. Then the money is sent to your bank account." And there are no redemption limits, he adds.

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Paper versions of savings bonds take more time to redeem. You have to go to the bank and prove who you are, says Adams, since the bonds are registered in your name. There are also redemption limits.

Buying through TreasuryDirect is easy, too. It's just a matter of logging onto your account, where you can buy savings bonds 24/7. You can also gift savings bonds or transfer them. And there are no brokerage fees.  

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