I-Bonds annual limit slashed from $30K to $5K?

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Tramper Al
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I-Bonds annual limit slashed from $30K to $5K?

Post by Tramper Al »

Hi,

I continue in my quest for a simple and cheap way to buy I-Bonds in paper form. None of the local credit unions, banks, or savings and loans that I have tried so far sell them.

Anyway, I just caught this announcement at the Treasury Direct Site:

Annual Purchase Limit For Savings Bonds Set at $5,000

TD Press Release

Looks like they are becoming aware that I-Bonds may in some circumstances be desirable investment holdings. This is effective January, so I guess if I act in December I could buy as much (per SSN) as will take 6 years to buy thereafter. I guess this will also effectively prevent "trading up" I-bonds of more than $10K per couple per year. Too bad, that.
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Rager1
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Post by Rager1 »

I agree, Tramper Al. This is really bad news.

Ed
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Opponent Process
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Post by Opponent Process »

I also tried to get paper bonds at a local WaMu for XMAS gifts. no luck. they said go to Treasury Direct and were under the impression you could buy paper bonds there.

so now I'm going to have to set up electronic accounts for my nephews.
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nisiprius
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Post by nisiprius »

I assume WaMu is a bank. I suspect they may have been fibbing. The last time I bought paper bonds I certainly noticed a distinct lack of enthusiasm on the part of the bank... they guy who knew what drawer the forms were in was out, etc. But I think banks are required to sell them.

Hmmm... the Treasury's FAQ says:
Series EE and Series I savings bonds can be purchased in paper form through most financial institutions.
No idea what "most" means.
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modal
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Post by modal »

I haven't been buying them lately, but this is kind of goofy. Maybe the fixed portion will be raised back up to 3% or 4%. :D
sscritic
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Post by sscritic »

Keep trying to find a bank that will sell paper bonds. The press release states that the limit is $5000 for paper and separately $5000 for electronic registration.

Have you tried a larger bank like Citibank or Bank of America? For example, not every bank will sell you foreign currency over the counter, but some branches in some larger cities will. Selling paper bonds might be similar.
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jh
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Post by jh »

...
Last edited by jh on Thu Jan 17, 2008 4:34 pm, edited 1 time in total.
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MahoningValley
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Purchace I-bond at bank

Post by MahoningValley »

You need to get purchase form from TD then take it to the bank and pay for them there. Worked for me at BofA.
sscritic
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Post by sscritic »

It was easier than I thought.

I walked over to my local Bank of America branch (total of six employees). I asked the manager about buying US Savings Bonds. She took me to a display by the front door and handed me a package "Purchasing U.S. Savings Bonds."

The package contained two forms: Order for Series EE U.S Savings Bonds (PD F 5263) and Series I Order for U.S. Savings Bonds (PD F 5374). Item 3 on each form was "Address to where bonds are to be mailed"

You fill out the form and return it to the bank. The bank acts as agent for the U.S. Treasury. It collect the money, affixes an agent stamp that the total amount of purchase is correct, and submits the form (and payment) to the Bureau of Public Debt.

"ALLOW ABOUT THREE WEEKS FOR PROCESSING"

I might just get some for my grandkids.

Note: In the old days, there were savings and loans like Washington Mutual and World Savings. Most of these institutions are now "Banks," however, they don't seem to be real full-service banks like Bank of America, Chase, etc.
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Tramper Al
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Post by Tramper Al »

sscritic wrote:Keep trying to find a bank that will sell paper bonds.
I am trying, though it's a bit painful trying to maintain a banking relationship over the long term when you don't need it for banking. While I live in the big city, the very few banks that sell savings bonds seem to be out in the suburbs and rural areas. The best I can hope for is a monthly fee, or to avoid that a much higher balance then I'd like to keep at a ridiculous interest rate. I have been spoiled by Vanguard rates and Fidelity services. I have been very happy living without a brick and mortar bank - until now.

OK, now you BofA I-bonds purchasers. Are you customers at B of A, with accounts? Or are they happy processing your Treasury purchases off the street? I am a former B of A customer, at best.
ZZ
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Post by ZZ »

Tramper Al wrote:
sscritic wrote:Keep trying to find a bank that will sell paper bonds.
I am trying, though it's a bit painful trying to maintain a banking relationship over the long term when you don't need it for banking. While I live in the big city, the very few banks that sell savings bonds seem to be out in the suburbs and rural areas. The best I can hope for is a monthly fee, or to avoid that a much higher balance then I'd like to keep at a ridiculous interest rate. I have been spoiled by Vanguard rates and Fidelity services. I have been very happy living without a brick and mortar bank - until now.
.
You can order I Bond forms from the Legacy treasury direct. They send you 3 at a time. You mail it along w/ payment of check, money order etc to your nearest Federal Reserve. My wife does it every month.

http://www.treasurydirect.gov/NC/FoRMSH ... site=indiv
Last edited by ZZ on Tue Dec 04, 2007 1:21 pm, edited 1 time in total.
sscritic
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Post by sscritic »

Tramper Al wrote:
sscritic wrote:Keep trying to find a bank that will sell paper bonds.
I am trying, though it's a bit painful trying to maintain a banking relationship over the long term when you don't need it for banking.
The BofA package I got allows payment by check from BofA or by deduction from your BofA checking account. The instructions also state:
"If you do not bank with us, please enclose an official check, cashier's check, or postal money order for the total issue price of the bond(s)."

BofA also accepts cash.

You don't need a banking relationship with them, just the form and some money.
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Soaker
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S.F. Chronicle column

Post by Soaker »

Here's this morning's column by San Francisco Chronicle columnist Kathleen Pender discussing the changes to the Savings Bond program:

Treasury takes new whack at savings bonds (Dec. 4, 2007)
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tarkbud
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Post by tarkbud »

Hi Al,

Gee, I thought we had your problem solved with the prior link I provided to the two FRB's that process savings bond orders. Did you run into a problem?

In the meantime I had also e-mailed td with my question and received a confirming answer. But I did not bother posting this because I thought the problem had already been solved as I did not see a post from you indicating any problems.
________________________
Answer to my e-mail I sent:

"Hello Sandy.

You are correct in the information you described about mailing in a
purchase form for a savings bond.

Mail the purchase form and check to your servicing Treasury Retail
Securities Site.. Contact information is found here:
http://www.treasurydirect.gov/FC/FCGate ... iv&app=sav

Sincerely,

Gary F
TRS Bond Examiner"



*********Original Email below*********


SITE: td01

Is it still possible to mail in a purchase form and a check for a savings
bond to a Federal Reserve Bank? Last I recall there were two branches that
accepted these and you mailed to one or the other based on where you lived.
Thanks for any help.

Regards,

Sandy xxxx
_________________

Sure would like to know if there is a problem using this and your Fido bank account.
I Bleed Purple!
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nisiprius
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Post by nisiprius »

Just for laughs, I sent a message via Treasury Direct's "Contact Us" page, asking why the limit was reduced, why it was reduced so drastically, and why it was reduced with such short notice. And pointing out briefly why TIPS were not a satisfactory substitute (fixed maturity date, hence market risk if you want to redeem before maturity).

I think we really should make a fuss about the short notice. And, yes, I think something odd must be going on.
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Tramper Al
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Post by Tramper Al »

Excellent, thanks cc and zz,

I have ordered paper forms from TD, and am investigating what appears to be a no minimum balance no fee checking account at B of A into which I can make free ACH transfers from a proper MMF account.

Sandy,
I do appreciate your info in the other thread. All my I-bonds purchase clicks on the Pittsburgh (where I will be for Christmas) Branch site led to either dead links or shuttle back to Treasury Direct. My conlusion was that it was not going to work that way. It may just be they've made it hard enough so that I will reconsider TD. Your link today does give me Pittsburgh for my zip, so perhaps it is as simple as sending the form I have ordered back there with a check. Thanks!

Until this morning, I thought I had until April to consider the current I-Bonds issue with fixed rate 1.2%.
Last edited by Tramper Al on Tue Dec 04, 2007 2:26 pm, edited 5 times in total.
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mas
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Post by mas »

Tramper Al wrote:I have ordered paper forms from TD, and am investigating what appears to be a no minimum balance no fee checking account at B of A into which I can make free ACH transfers from a proper MMF account.
Make sure that offer does not require direct deposit to qualify for no fees.
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Tramper Al
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Post by Tramper Al »

mas wrote:Make sure that offer does not require direct deposit to qualify for no fees.
Yes, I am both skeptical and wary. Supposed to be some online application special deal. I will print out the specs to arm myself for dispute. At best I will have to watch for a change of rules down the road.
Last edited by Tramper Al on Tue Dec 04, 2007 2:15 pm, edited 1 time in total.
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Re: S.F. Chronicle column

Post by tetractys »

Soaker wrote:Here's this morning's column by San Francisco Chronicle columnist Kathleen Pender discussing the changes to the Savings Bond program:
Treasury takes new whack at savings bonds (Dec. 4, 2007)
Interesting article. It mentions that the Treasury plans on reducing the minimum purchase of Treasury securities from $1000 to $100, and has a list of annual total savings bond purchases showing the gradual rise since 1998 and the sudden drop so far in 2007.

Tet
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tarkbud
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Post by tarkbud »

Hi again Al--Sorry to hear you had probs. But as zz attests it apparently can be done relatively easily. Good luck whichever way you go.

Regards,

Sandy
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Post by ZZ »

It generally takes less than a week to receive the I Bond forms from TD. Like I said, 3 at a time. If you anticipate needing more for multiple accounts/gifts etc. this year, maybe order some additional and have them sent to a friends house since you are trying to get it crammed in before Jan 08.

We mail ours in so that they arrive before the end of the month so you get the current months rate. Usually send in around the 20th. Since it is Christmas time the mail slows down, so I would maybe spend $4 extra bucks for Priority Mail if you want them to arrive before Dec. 28. if you are running close. Christmas is a long weekend and all mail gets slow.
ZZ
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Post by ZZ »

nisiprius wrote:And, yes, I think something odd must be going on.
I tend to think it's some evil conspiracy to lock us out of protection when they balance the books w/inflation. On the other hand, a while back I saw the numbers of how many savings bonds were lost and unclaimed over the years. ""Almost six per cent of uncashed Savings Bonds are no longer earning interest. The Treasury has never put much effort into returning this interest-free loan that currently amounts to over $11 billion.""

Perhaps Treasury runs the savings bond program like many merchants offer rebates for buying a product. So many people forget the rebate or lose it, they make some big bucks. Your 3 year old niece who you gave a $50 Savings Bond to on her 3rd birthday is more likely to lose it than some guy dropping $30 grand into savings bonds.
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Mel, Any comments?

Post by Munir »

Mel, as the "father" of I-bonds and author of the tutorial course on them, what are your thoughts? Will you be updating the tutorial essay on I- bonds?

Munir
sport
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Post by sport »

Perhaps the lower limit is intended to reduce redemptions and repurchases if (and when) the fixed rate is increased. If this is so, the lower limit will give the Treasury greater ability to raise future rates. Maybe this will be a blessing in disguise. One can only hope.

Best wishes,
Jeff
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yes, Jeff

Post by hollowcave2 »

Yes, Jeff, I agree with your analysis in the above post. I think this will put a damper on "rolling" I-bonds every time the fixed rate is increased. Perhaps the Treasury was trying to address this problem for them.

And maybe, the silver lining in all of this is the ability for the Treasury to raise rates, but they're not going to raise them above the current TIPS rates, so there is a constraint there as well. In fact, they need to keep them lower than the TIPS rates because investors are taking more risk in TIPS and need to be compensated for that. So ultimately, the market will still rule.

I am also eager to hear Mel's thoughts on this.

Steve
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preserve
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Post by preserve »

Henry Paulson is a dog.

First he, orchestrates super-siv's. Now he dismantles a public savings plan that competes with walstreet.

Here is a link to a little history when he was appointed. http://www.thenation.com/doc/20060619/prins

Its interesting to note Rubin was a CEO at Goldman Sachs before becoming Treasurer. He took part in de-regulating walstreet.
Last edited by preserve on Tue Dec 04, 2007 8:00 pm, edited 1 time in total.
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Re: Mel, Any comments?

Post by Mel Lindauer »

Munir wrote:Mel, as the "father" of I-bonds and author of the tutorial course on them, what are your thoughts? Will you be updating the tutorial essay on I- bonds?

Munir
Hi Doc and Steve:

I think Jeff's thinking makes about as much sense as anything else I can think of. Otherwise, they'd either be stuck at the lower rates forever, or face increasing redemptions when/if rates rose, resulting in greater borrowing costs for the Treasury.

I think their effort to move everyone to TD and totally eliminate paper bonds has been a dismal failure, so it wouldn't surprise me to see them raise the limits for TD purchases while keeping them low for paper bonds at some future point. So this may simply be the first step in that process.

Another possibility is that Treasury is trying to get folks to "load up" on the current low-rate I Bonds before the new lower limit takes effect. Sort of like announcing a mutual fund closing in advance of the actual closing date in order to gather more assets quickly.

Finally, I don't plan to update the I Bond Tutorial until/unless two things happen:

1. I Bond become an attractive investment once again, and
2. The Treasury quits screwing with the system all the time, since I can't write about a moving target.

Best regards to all,

Mel
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Post by ZZ »

.

Actually, the rate adjustment is extreme when adjusted to REAL DOLLARS. Below is from TD website:

Over the years, limits have been adjusted by the Treasury Department several times and have ranged from a low of $3,750 (at issue price) for Series E bonds from 1941 through 1947 to the $30,000 (issue price) limit that most recently applied to both Series EE and Series I bonds. The limit was last set at $5,000 (issue price) in 1973.
$5,000 in 1973 = $24,000 in today's dollars. So the 30k limit adjusted for inflation was about right. $5,000 in today's dollars adjusted to 1943 dollars = $1,039

The so called "low" according to TD of $3,750 in 1941 adjusts to $52,000 in 2006 dollars or a miserly $269 in 2006 vs. 1941 dollars.


Anyone with a war bond from the 40's left over from a grandparent, knows how worthless that piece of paper is. Same goes for any bond from 1973 just as the BIG inflation took off.


Benevolent government my tail end.

Note, I Bonds for protection - didn't exist then.
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