The U.S. Treasury Department has chipped away at the savings bond program by eliminating its marketing budget, ending a program that allowed employees to buy savings bonds through payroll deductions and also ending over-the-counter sale of treasury bonds in financial institutions.
The final step in securing savings bonds in paper form is now on the chopping block, the Tax-Time Savings Bond Program. A bipartisan group of congressmen — including U.S. Rep. Matt Cartwright — introduced a bill Wednesday that seeks to ensure this option continues.
The Tax-Time Savings Bond Program allows Americans to buy savings bonds using their refund monies and is the last “paper” bonds Americans are able to purchase. Without this option all savings bonds must be purchased electronically and exist only in electronic form.
Cartwright said that for many, including senior citizens and those without bank accounts including low-income families, the ability to purchase a bond will go away without the Treasury’s commitment to continuing the program. While the Treasury has not announced the program will end, it has also not committed to keeping it going past 2014.
So Cartwright’s bill aims to force the Treasury’s hand.
“Savings bonds represent a powerful and patriotic savings vehicle for millions of American families,” said Cartwright, D-Moosic. “Treasury’s decision would severely restrict access to savings bonds for many low-income families. Every family deserves access to an affordable savings vehicle and an opportunity to attain financial security.”
Ending the Tax-Time Savings Bond Program, Cartwright said, would cut off savings bond access to the approximately 20 percent of Americans who lack Internet access, and the more than 10 million Americans who do not have a bank account. At a time when more families are saving money, to eliminate one avenue for them to do so seems counter-intuitive, he added.
For many, savings bonds offer competitive interest rates and are viewed as a safe savings mechanism without having to open a bank account where account fees may be charged. Currently a U.S. Savings “I” bond will earn a composite rate of 1.18 percent. This is because the interest rates on I bonds is a combination of a fixed rate and the inflation rate. The average savings rate offered by banks stands at .45 percent with the best rate at .86 percent.
Over the past three years more than 75,000 tax filers have purchased U.S. savings bonds, accumulating more than $40 million in savings for themselves and their loved ones, according to Cartwright’s office. These bonds can be purchased in $50 increments up to $5,000.
On Thursday, Consumers for Paper Options, a coalition of individuals and organizations advocating for access to paper-based services and information, applauded the legislation.
“The SAVINGS Act is especially necessary because the digital divide is, unfortunately, alive and well in this country, where a quarter of Americans are still without Internet access,” said John Runyan, executive director of Consumers for Paper Options, in a letter sent to Cartwright. “Treasury’s decision to eradicate the over-the-counter sale of savings bonds has no doubt resulted in a decline of savings bond purchases, while robbing many Americans of access to a time-honored savings vehicle.”