Government site to buy savings bonds shows your age
As inflation has risen, many consumers have turned to the federal government’s online TreasuryDirect system to purchase inflation-indexed savings bonds. But the 20 year old website may be showing its age.
In particular, users may face obstacles in changing or updating a bank account linked to their TreasuryDirect account, the site for purchasing savings bonds as well as other government securities, including Treasury notes and bonds. A personal checking or savings account is required to pay for bond and note purchases and to accept money when bonds or notes are redeemed.
Users submit their bank information when they sign up for TreasuryDirect. But to change your bank account later, if required, a paper form is still required.
She said Monica Beisel, a nurse practitioner in San Angelo, Texas, learned about the hoops that customers must go through after urging their four children, all young adults, to update their bank accounts at TreasuryDirect.
The children opened TreasuryDirect accounts to hold the savings bonds their grandmothers had bought for them, but the linked accounts were closed, Ms Beisel said. She urged her children to partially update the accounts so they can buy Series I bonds, which are paying much higher interest rates than savings accounts.
The Treasury Department provides a short video that instructs users to log on to TreasuryDirect and scroll through a tab to “add or edit” their bank account. But instead of making changes with a few clicks, users are directed to print out a form and take it to a bank or credit union to sign and have it certified by a bank official, sending it to Treasury Post. In Minneapolis before mailing to the office box.
“It’s ridiculous,” said Ms Beisel. Her children, she said, are busy and far-flung, and not all of them have time to complete tasks. “Who would have thought in this day and age that updating personal bank account information would be a hassle?”
She added: “It seems like the government doesn’t want regular citizens to buy savings bonds.”
His concerns are not new. Online forums point out that people were frustrated with the process until 2013.
Ken Tumin, founder of consumer banking website DepositAccounts.com and a close watcher of I Bonds, said he was in the same situation: His Treasury Direct account is linked to a bank account he no longer uses. He said he planned to visit his bank “soon” to sign the form and update the account. The paperwork can help thwart hackers, he said, but “it’s important to link your TreasuryDirect account to a bank account you plan to hold and maintain for a long period of time.”
Bank branch closures during the pandemic may add another challenge. Some banks may offer remote online notary services, but laws vary by state. (The TreasuryDirect form required to change banks states that “notary certification is not acceptable,” but it may be allowed if the notary is a bank employee, according to TreasuryDirect.)
The TreasuryDirect website was created in late 2002 as part of a federal shift from paper to digital bonds, replacing a system that lets people buy bonds over the phone.
According to the announcement about the website, published in the Federal Register, “the system will provide greater flexibility and convenience for the investor by eliminating the paperwork burden inherent in the existing TreasuryDirect system.” The notice states that “online transactions that an account owner may undertake” include “making changes to account information”.
Treasury Department spokesman John Rizzo said in an emailed statement that a paper form was a security move “aimed at preventing unauthorized transactions.” Banks will usually authenticate the form without any charges, he added. (However, Mr. Tumin said that some branches may charge you a fee, depending on your relationship with the bank.)
The department is developing an “up-to-date, modern replacement” for the TreasuryDirect system with security protocols that allow account changes without paper forms, Mr. Rizzo said. He did not cite a timeline but said the upgrade was a “priority”.
“We are committed to ensuring that TreasuryDirect users have a positive customer experience in addition to keeping their financial information secure,” he said.
Here are some questions and answers about using TreasuryDirect:
If I mail my bank change form, how long does it take for TreasuryDirect to update my account?
A client’s Treasury Direct account is typically updated within 10 business days after a completed form is received, Mr. Rizzo said.
You can also add secondary bank accounts to your TreasuryDirect account using the paper method, then later designate one of them as your primary account by contacting TreasuryDirect by phone or email, according to the website.
If you want to use an Internet bank as your personal account, it’s probably best to do so when you set up your TreasuryDirect account. Adding one later can cause problems, as virtual banks lack traditional branches to go to.
Is there still a way to buy paper savings bonds?
Yes. You can purchase Paper I bonds — up to $5,000 — using all or part of your federal income tax refund. Fill out the second part of Form 8888 and file it with your tax return. The Internal Revenue Service will mail the bond to you. (You can also complete the first part of the form to purchase digital bonds with your refund and deposit them in your TreasuryDirect account.)
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