Government Site for Buying Savings Bonds Shows Its Age

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Government Site for Buying Savings Bonds Shows Its Age

As inflation has skyrocketed, many consumers have turned to the federal government’s TreasuryDirect online system to buy inflation-linked savings bonds. But the 20-year-old site 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 used to purchase savings bonds, as well as other government securities, including Treasury bills and bonds. A personal checking or savings account is required to pay for purchases of bonds and debentures and to accept funds when the bonds or debentures are redeemed.

Users submit their banking information when they log into TreasuryDirect. However, a later change of bank account still requires a paper form if needed.

Monica Beisel, a registered nurse in San Angelo, Texas, learned about the hurdles clients face after she asked her four children, all young adults, to update their bank accounts to TreasuryDirect, she said.

The children opened TreasuryDirect accounts to hold savings bonds their grandmother bought for them, but the linked accounts have since been closed, Ms. Beisel said. She urged her children to partially upgrade the accounts so they could buy Series I bonds, which pay a much higher interest rate than savings accounts.

The Treasury Department offers a short video that instructs 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, the next step is for users to print out a form and take it to a bank or credit union to have it signed and notarized by a bank officer before taking it to a Treasury Department PO box send in Minneapolis.

“That’s ridiculous,” said Ms. Beisel. Her children are busy and far away, she said, and not all had time to complete the task. “Who would have thought these days that updating personal bank account information would be a hassle?”

She added: “It’s as if the government doesn’t want ordinary citizens to buy savings bonds.”

Your concerns are not new. Online forums show people were frustrated with the process as early as 2013.

Ken Tumin, founder of consumer banking website DepositAccounts.com and a keen observer of I Bonds, said he’s in the same situation: His TreasuryDirect account is linked to a bank account he no longer uses. He said he plans to visit his bank “soon” to have the form signed and the account updated. The paper process can help thwart hackers, he said, but “it’s important to link your TreasuryDirect account to a bank account that you plan to hold and maintain long-term.”

The closure of bank branches during the pandemic may have added another challenge. Some banks may offer remote online notary services, but laws vary by state. (TreasuryDirect’s form required for switching banks states that “notarization is not acceptable,” but according to TreasuryDirect it may be acceptable if the notary is a bank employee.)

The TreasuryDirect website was created in late 2002 as part of a federal switch from paper to digital bonds, replacing a system that allowed people to buy bonds over the phone.

“The system will provide investors with greater flexibility and convenience by removing the administrative burden associated with the current TreasuryDirect system,” the announcement reads through the website published in the Federal Register. The notice states that “the online transactions that an account holder may conduct” involve “changes to account information.”

John Rizzo, a Treasury Department spokesman, said in an emailed statement that a paper form is a security step “aimed at preventing unauthorized transactions.” Banks will typically certify the form for free, he said. (However, Mr. Tumin said some branches might charge you a fee depending on your relationship with the bank.)

The department is developing an “updated, modern replacement” for the TreasuryDirect system with security protocols that allow account changes without paper forms, Mr. Rizzo said. He didn’t give a timeline, but said the upgrade was “a priority.”

“We are committed to ensuring TreasuryDirect users have a positive customer experience and keep their financial information secure,” he said.

Here are some questions and answers about using TreasuryDirect:

The customer’s TreasuryDirect account is typically 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 and later designate one of them as your primary account by contacting TreasuryDirect by phone or email, depending on the website.

If you wish to use an internet bank as your personal account, the best way to do so is probably when setting up your TreasuryDirect account. Adding a bank later can pose problems as virtual banks lack traditional branches that can be visited.

Yes. You can buy Paper I Bonds — up to $5,000 — using all or a portion of your federal income tax refund. Complete the second part of Form 8888 and submit it with your tax return. The Internal Revenue Service will mail you the bonds. (You can also fill out the first part of the form to purchase digital bonds with your refund and have them deposited into your TreasuryDirect account.)