U.S. to Sell Series EE Bonds Via the Web

The Treasury Department on Monday launched a program allowing savers to buy Series EE savings bonds over the Internet.

The move is part of an ongoing effort to reduce the cost of issuing, tracking and replacing the roughly 700 million individual savings bonds outstanding, said Peter R. Fisher, under secretary for domestic finance.

Savers now can buy EE bonds by setting up an account through the TreasuryDirect program (www.treasurydirect .gov). The accounts can debit any bank checking or savings account.

Paperless EE bonds will differ from paper bonds in some ways that the Treasury hopes will make the electronic versions more attractive. For example, the electronic bonds will do away with specific denominations and “discounts.”

Paper EE bonds are sold only in eight denominations -- $50, $75, $100, $200, $500 $1,000, $5,000 and $10,000 and are sold at a 50% discount to face value. In other words, a saver pays $25 for a bond that will be worth $50 at maturity. The bond matures when the interest accruals cause it to reach its face value.

Electronic bonds, by contrast, can be purchased in any penny increment above the minimum purchase price of $25, the Treasury said.

Interest then is earned on the total amount invested at 90% of the average return on a five-year Treasury note. That rate is adjusted twice a year. The current rate, through October, is an annualized 2.66%, which is well above what many short-term savings accounts and money-market funds pay.

The Treasury had been selling Series I bonds (inflation-adjusted bonds) over the Internet since October. Conventional Treasury bills, notes and bonds have been available over the Net for several years.

Eventually, the government wants to make all savings bond purchases electronic and provide Web-based confirmations and management, Fisher said. By replacing the paper-based system the government could save roughly $130 million annually, he said.

Americans own about $195 billion in savings bonds.