United States Savings Bonds: Difference between revisions

In 2002, the Treasury Department started changing the savings bond program by lowering interest rates and closing its marketing offices.<ref>{{cite news|author= Pender, Kathleen|title=Treasury takes new whack at savings bonds|url=http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/04/BU0ATNHMO.DTL|date=December 3, 2007|work=The San Francisco Chronicle|publisher=Hearst|access-date=February 14, 2007}}</ref> As of January 1, 2012, financial institutions no longer sell paper savings bonds.<ref>{{cite news|author= Pender, Kathleen|title=Treasury takes new whack at savings bonds|url=http://www.savingsbonds.gov/news/pressroom/pressroom_comotcend0711.htm|date=July 13, 2011|work=Treasury Department News Release|publisher=Treasury|access-date=November 25, 2011}}</ref> That year, the Department of the Treasury's [[Bureau of the Public Debt]] made savings bonds available for purchasing and redeeming online. U.S. savings bonds are now only sold in electronic form at a Department of the Treasury website,<ref>{{cite journal |url=http://danielbortzdotcom.files.wordpress.com/2011/09/money_sav_sept-2011.pdf |title=Bye-bye, paper savings bonds |first=Daniel |last=Bortz |journal=U.S. News & World Report |volume=40 |issue=8 |page=128 |date=September 2011 |access-date=March 1, 2017-03-01}}</ref> [[TreasuryDirect]], with the exception that paper Series I savings bonds can be purchased with a portion of a federal income tax refund using Form 8888.<ref>[https://www.irs.gov/pub/irs-pdf/f8888.pdf Paper I Bonds As Income Tax Refund] Accessed October 8, 2018</ref>

As of 2023, redeeming savings bonds is very difficult, as most banks decline to do so. ''The New York Times'' reported that the reasons banks gave for this were "the equivalent of 'sorry, we just don’t feel like it.'"<ref name=":0">{{Cite news |last=Copeland |first=Rob |date=October 7, 2023-10-07 |title=When Did Cashing Savings Bonds Become So Impossible? |language=en-US |work=The New York Times |url=https://www.nytimes.com/2023/10/07/business/cashing-savings-bonds.html |access-date=October 14, 2023-10-14 |issn=0362-4331}}</ref> Where bonds are accepted, redeeming them can be a very onerous and time-consuming process.<ref name=":0" />

In 1998, the Treasury introduced the '''{{vanchor|Series I bonds}}''' which have a variable yield based on [[inflation]].<ref>{{Citation |title=Vice President Gore Introduces New Inflation-Indexed Savings Bonds, I Bond Ceremony, Jul 8,1998 |url=https://www.youtube.com/watch?v=B4cEKepW0Yc |language=en |access-date=2022-07-July 25, 2022}}</ref><ref>{{Cite web |title=New savings bonds are protected from inflation |url=https://www.tampabay.com/archive/1998/07/08/new-savings-bonds-are-protected-from-inflation/ |access-date=2022-07-July 25, 2022 |website=Tampa Bay Times |language=en}}</ref><ref>{{Cite web |title=NEW I-BONDS GO ON SALE TODAY, WILL EARN 3.40 PERCENT OVER INFLATION |url=https://www.treasurydirect.gov/news/pressroom/pressroom_comfirst.htm |access-date=2022-07-July 25, 2022 |website=www.treasurydirect.gov}}</ref> The Treasury currently issues Series I bonds electronically in any denomination down to the penny, with a minimum purchase of $25. Paper bonds continue to be issued as well, but only as an option for receiving an individual's federal income tax refund using IRS Form 8888.<ref name="irs">{{cite web| url=https://www.irs.gov/newsroom/article/0,,id=218387,00.html| title=Use Your Federal Tax Refund to Buy Savings Bonds| date=February 1, 2011| publisher=United States Internal Revenue Service| access-date=April 27, 2011}}</ref> The paper bonds are currently issued in denominations of $50, $100, $200, $500, and $1,000, featuring portraits of [[Helen Keller]], [[Martin Luther King Jr.]], [[Chief Joseph]], [[George C. Marshall]], and [[Albert Einstein]], respectively. Three additional denominations were previously issued but discontinued: $75, $5,000, and $10,000 featuring [[Hector P. Garcia]], [[Marian Anderson]], and [[Spark Matsunaga]].<ref>{{cite web |title=What Paper I Savings Bonds Look Like |url=https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibondslooklike.htm |website=www.treasurydirect.gov |publisher=Treasury Direct |access-date=23 March 23, 2022}}</ref> Gulf Coast Recovery Bonds are a special issue of I series issued from March 29, 2006, through September 30, 2007, in order to encourage public support for hurricane recovery, including [[Hurricane Katrina|Katrina]], in the affected states.<ref>{{cite web|title=What are Gulf Coast Recovery Bonds?|url=https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ifaq.htm#gulfcoast|date=May 24, 2022|accessdate=May 30, 2022}}</ref>

The interest rate for Series I bonds consists of two components. The first is a fixed rate which will remain constant over the life of the bond; the second component is a variable rate adjusted every six months from the time the bond is purchased based on the current inflation rate. The fixed rate is determined by the Treasury Department; the variable component is based on the non-seasonally adjusted [[United States Consumer Price Index|Consumer Price Index]] for urban areas (CPI-U) for a six-month period ending one month prior to the rate adjustment. Specifically the variable rate is calculated by looking at the percent change over the previous six months of available data, and multiplying the percent change by two to annualize the rate. New rates are published on May 1 and November 1 of each year.<ref name="ibonds">{{cite web |date=November 1, 2015 |title=I Savings Bonds Rates & Terms |url=https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm |access-date=June 6, 2017 |publisher=TreasuryDirect.gov}}</ref><ref name="savingsrate" /> For example, on November 1, 2021, the most recent CPI-U data that was available was from September 2021, where the non-seasonally adjusted CPI-U was 274.310. Six months earlier, in March 2021 the CPI-U was 264.877. Thus, the percent change was 3.56%. Multiplying this by 2 yields the variable component of 7.12%.

The U.S. Treasury previously issued bonds in a variety of series, some of which still earn interest today. Series A was issued only during 1935, Series B during 1936, Series C from 1937 to 1938, Series D from 1939 to 1941, Series E from 1941 to 1980, Series F and G from 1941 to 1952, Series H from 1952 to 1979 when it was replaced by Series HH (itself discontinued in 2004), Series J and K from 1952 to 1957, and "Freedom Shares" Savings Notes from 1967 to 1970. In addition, there were special designs for some paper bonds issued during their lifetimes, notably a version of the Series E bonds issued from 1975 to 1976 labeled as a "Bicentennial Bond" and Series EE bonds sold from December 2001 to 2011 labeled as a "Patriot Bond."<ref>{{cite web |title=Timeline of U.S. Savings Bonds |url=https://www.treasurydirect.gov/indiv/research/history/histtime/histtime_sb.htm |website=www.treasurydirect.gov |publisher=Treasury Direct |access-date=12 March 12, 2022}}</ref>

The Treasury began issuing savings bonds in March 1935, with each of the first four series released sequentially without overlap and under similar terms. These bonds were purchased at 75% of their face value and would mature after 10 years. The interest earned would not be taxed for Series A, B, and C, as well as Series D bonds issued before March 1941. The bonds were issued in denominations of $25, $50, $100, $500, and $1,000, and can still be redeemed for face value today.<ref name="Series Details">{{cite web |title=Other Treasury Securities |url=https://www.treasurydirect.gov/indiv/research/indepth/other/res_othersecurities.htm |website=www.treasurydirect.gov |publisher=Treasury Direct |access-date=23 March 23, 2022}}</ref>

From 1991 through 2000, the Treasury's Bureau of Public Debt announced an Annual U.S. Savings Bonds Student Poster Contest each fall to promote the sale of bonds with a specified theme. Each spring, nearly $100,000 was distributed to winners in grades 4 through 6 across all fifty states, District of Columbia, and Puerto Rico. Winners were chosen by state art councils, the news media, sponsors, and volunteers based on criteria of originality, poster design, and visual appeal. The first-place winning artwork from each state was exhibited in Washington D.C., and photographs of the winning posters with names of the artists and their schools were displayed in major airports across the country and the treasury website.<ref>{{cite web |title=Public Debt Begins 10th Annual Savings Bonds Student Poster Contest; Winners Will Receive Close to $100,000 in U.S. Savings Bonds |url=https://www.treasurydirect.gov/news/2000/release-11-15/ |website=treasurydirect.gov |access-date=20 October 20, 2023 |date=15 November 15, 2000}}</ref>