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More Reasons To Skip Savings Bonds!

November 9, 2010

The U.S. Treasury is wielding both a carrot and a stick to persuade savers to switch from U.S. savings bonds to T-bills, notes and bonds. The Treasury lowered the minimum purchase for T-bills to $100 while capping the amount of savings bonds you can buy in a single year at $5,000.Tresury bond poster

Savings bonds have faded in popularity. In the government’s 1999 fiscal year, savers purchased more than 49 million bonds for $4.7 billion. They bought 17.6 million bonds for $2 billion in fiscal 2010. As of January 1, you won’t be able to buy paper savings bonds through payroll deduction; the option ended for federal workers and military personnel in September. You can still have money deducted from your paychecks for savings bonds, but only by signing up for a free online account at www.treasurydirect.gov  and arranging an automatic debit.

Paper bonds are still available to give as gifts. Go to your local bank, where you’ll pay half the face value – say, $25 for a bond that will be worth $50 when it matures. Or buy gifts online once you have a Treasury Direct account. When you buy online you pay the face value, and the bonds earn interest until maturity. The recipient must also have a Treasury Direct account.

The decline in popularity of savings bonds isn’t surprising given their low rates. If you need help in deciding what to do, contact GAI (www.gunwel.com) so we can give you the up-to-date info you need to make smart decisions. Call us at 212-979-6830 today. See you soon!

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