Paper savings bonds disappearing faster than you think

The official word is that paper U.S. savings bonds will no longer be sold at banks beginning in 2012.

But don’t expect to get any help in the meantime buying a paper savings bond at Bank of America, which quietly stopped selling savings bonds three months beforehand.

So far, Bank of America is the only bank known to end the program early, according to the Bureau of the Public Debt.

It’s most certainly a nonpublicized quirk and one you want to keep in mind if you’d still like to pick up some paper Series EE or Series I, inflation-index bonds.

The Bureau of Public Debt gave no indication this summer that any banks would stop issuing paper savings bonds earlier than others. A release dated July 13 remains at treasurydirect.gov.

It says: As of Jan. 1, 2012, paper savings bonds will no longer be sold at financial institutions.

The program for buying savings bonds is going mostly electronic – which is sort of a new-Coke, old-Coke proposition for some savings bonds connoisseurs.

Some seniors and others really liked the old formula for slipping those paper bonds into birthday cards – and holding onto paper bonds for their own savings.

Some don’t want a Web-based system that will continue to offer savings bonds accounts through TreasuryDirect.

About 88 percent of savings bonds sold this year, as of the end of August, were paper, and 12 percent were electronic.

If you’re planning to shop for paper bonds, it may be smart to act weeks before the end of December.

Retirees and others may not even realize that they cannot buy a paper bond at the bank until they walk up to a teller and find out.

Some will get this surprise earlier than others.

A reader called me to say that someone at her Bank of America branch in Taylor, Mich., told her that the bank had just stopped processing paperwork for people who want to buy U.S. savings bonds.

For years, the actual savings bonds were mailed to the buyer’s house, but the process started over-the-counter at a bank window.

After I got the tip from the reader, I tested it out.

I went to a Bank of America branch in Royal Oak, Mich., last week, and the teller told me that all bank branches were no longer selling paper bonds.

U.S. savings bonds are now being sold only online, she said.

She seemed to imply that no bank anywhere dealt with new bonds. But I knew that didn’t make sense.

Gee, I told her, I just filled out a form to buy two Series I bonds at a Comerica branch.

She backed off a bit, noting that Bank of America stopped offering the paper bonds as of Sept. 30.

Here’s what savers must know: Plenty of other banks are still working to process paperwork if you want to buy paper savings bonds in the next several weeks.

Beginning Jan. 1, though, forget it.

You may need to take cash for the purchase if you don’t have an account at that bank.

Some bankers may accept a check from another institution.

Sure, at a time when we’re looking at the Occupy Wall Street movement and the 99 percent crowd, I know it’s small potatoes to get a little crazy about one huge bank making it that much harder to buy paper U.S. savings bonds in the next few weeks.

No matter; it is one more hurdle for little savers at a time when, frankly, we’ve all had enough.

Savings bonds are a staple where you can stash some money safely without putting it in a bank. The rates on U.S. savings bonds are not bad, particularly when you look at the do-nothing-rates being paid on many savings accounts at banks.

A Series EE savings bond that’s issued by Oct. 31 would have a 1.1 percent fixed rate.

A new Series I bond – the inflation-indexed savings bonds – has an initial rate of 4.6 percent if the bond is issued by Oct. 31. The rate would change based on inflation every six months.

New rates are announced each Nov. 1 and May 1. Various rules apply regarding cashing bonds, too.

I doubt we’ll see the uproar that many younger consumers had when they learned of Bank of America $5-a-month fee for some accounts if customers use the bank’s debit card for purchases at the grocery store and elsewhere.

Many are in love with their plastic. But believe me, when it comes to savings bonds, many seniors and others just love that paper bond, too.

Susan Tompor is the personal finance columnist for the Detroit Free Press.