(Adds sales figures in fourth paragraph.)
July 13 (Bloomberg) -- The Treasury Department will halt sales of paper U.S. savings bonds as of January through banks and other financial institutions to reduce costs by about $70 million during the next five years.
The end of paper savings bonds, which were introduced in 1935, continues the Treasury’s goal of becoming entirely electronic. Series EE and I savings bonds will remain available through the TreasuryDirect website, which has been in operation since 2002, the Bureau of the Public Debt said in a statement.
“They are a part of American history and culture. We get that,” wrote Joyce Harris, director of public and legislative affairs at the Bureau of the Public Debt, in an e-mail. “But when you look at the numbers - decline in sales over the years and the costs to store bond stock, print and mail bonds - and you consider the push to find savings and efficiencies in government, particularly as of late, this was the right decision.”
Electronic sales accounted for 11 percent of the $1.2 billion savings bonds purchased from October 1, 2010, through June 30. Online purchases made up just 4 percent of sales in fiscal year 2003, the first year electronic sales were offered, according to Harris. The number of savings bonds sold has decreased by 53 percent since 2001, she said.
As of June 30, there were 672 million outstanding paper savings bonds worth $181 billion. About 45 million are matured, unredeemed savings bonds worth about $16.2 billion, according to Harris.
Investors holding paper savings bonds can still redeem them at banks. Bonds that have not matured, but were lost, stolen or destroyed, can be reissued in paper or electronic form. Sale of paper bonds through traditional payroll plans ended Dec. 31.
The Treasury expects to save $120 million during the next five years through reduced printing, mailing, storing bond stock and fees paid to financial institutions for processing bond applications for both payroll plans and sales to individuals.
The interest rate on I bonds, which are sold at face value, is 4.6 percent through October, according to TreasuryDirect.gov.
--Editors: Dave Liedtka, Paul Cox
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