As inflation has risen, many consumers have turned to the federal government’s online website TreasuryDirect system to buy inflation-indexed savings bonds. But the 20 year old website may be showing its age.
In particular, users may encounter hurdles when changing or updating the bank account they link to their TreasuryDirect account, the site for buying savings bonds, and other government securities, including Treasury bills and bonds. A personal checking or savings account is required to pay for bond and note purchases and to accept money when the bonds or notes are redeemed.
Users provide their banking information when they sign up for TreasuryDirect. But changing their bank account later, if necessary, still requires a paper form.
Monica Beisel, a nurse practitioner in San Angelo, Texas, learned about the hoops customers have to go through after urging her four children, all young adults, to update their bank accounts on TreasuryDirect, she said.
The kids opened TreasuryDirect accounts to hold savings bonds their grandmother bought for them, but the linked accounts had since been closed, Ms Beisel said. She urged her children to partially update the accounts so that they could buy Series I bonds, which pay a much higher interest than savings accounts.
The Ministry of Finance offers a brief video which requires users to log into TreasuryDirect and scroll to a tab to add or edit their bank account. But instead of making the change with a few clicks, users are then prompted to print a form and take it to a bank or credit union for signature and certification by a bank officer before being sent to a Department of Treasury PO Box in Minneapolis.
“That’s ridiculous,” said Mrs. Beisel. Her kids are busy and far away, she said, and not all of them have had time to complete the task. “Who would have thought in this day and age that updating personal bank account information would be a hassle?”
She added: “It’s like the government doesn’t want ordinary citizens to buy savings bonds.”
Her concerns are not new. Online forums show that people were frustrated with the process as long ago as 2013†
Ken Tumin, founder of consumer banking website DepositAccounts.com and closely watched I-bonds, said he was in the same situation: His TreasuryDirect account is linked to a bank account he no longer uses. He said he planned to visit his bank “soon” to have the form signed and the account updated. The paper-based process could help thwart hackers, he said, but “it’s important to link your TreasuryDirect account to a bank account that you plan to keep and keep for the long term.”
Closing bank branches during the pandemic may have presented a new challenge. Some banks may offer at a distance online notary services, but the laws vary by state. (The TreasuryDirect form required to change banks states that “notary certification is not acceptable,” but it may be allowed if the notary is a bank employee, according to TreasuryDirect.)
The TreasuryDirect website was created in late 2002 as part of a federal shift from paper to digital bonds, replacing a system that allows people to buy bonds over the phone.
“The system will provide greater flexibility and convenience to the investor by eliminating the administrative burden inherent in the current TreasuryDirect system,” the announcement said on the website published in the federal registry† The message stated that “the online transactions an account owner can make” also include “changes to account information.”
John Rizzo, a spokesman for the Treasury Department, said in an emailed statement that a paper form was a security step “aimed at preventing unauthorized transactions.” Banks will typically certify the form free of charge, he said. (However, Mr. Tumin said that some branches may charge you fees, depending on your relationship with the bank.)
The department is developing an “updated, modern replacement” for the TreasuryDirect system with security protocols that enable account changes without paper forms, Mr. Rizzo said. He didn’t mention a timeline, but said the upgrade was “a priority.”
“We are committed to ensuring that TreasuryDirect users have a positive customer experience, in addition to keeping their financial information safe,” he said.
Here are some questions and answers about using TreasuryDirect:
If I mail the form to change banks, how long will it take for TreasuryDirect to update my account?
The customer’s TreasuryDirect account is usually updated within 10 business days of receiving a completed form, Mr Rizzo said.
You can also add secondary bank accounts to your TreasuryDirect account using the paper method, then later point out one of them as your primary account by contacting TreasuryDirect by phone or email, according to the website.
If you want to use an internet bank as your personal account, it’s probably best to do this when creating your TreasuryDirect account. Adding later can be a problem as virtual banks don’t have traditional branches to visit.
Is there another way to buy paper savings bonds?
Yes. You can buy paper I-bonds — up to $5,000 — using all or part of your federal income tax refund. Complete the second part of . in Form 8888 and file it with your tax return. The tax authorities will send the bonds to you. (You can also fill out the first part of the form to buy digital bonds with your refund and have them deposited into your TreasuryDirect account.)