Major changes have been made in the U.S. Savings Bonds program. The following FAQ comes from the new web site for U.S. Savings bonds - TreasuryDirect.

This is a series of Frequently Asked Questions about recent changes to the Savings Bond Program. Select the appropriate link below to find the answers to questions you may have about changes to the program.

Original Maturity

1. What is an "original maturity period" and how has it changed for paper EE bonds?

Paper EE bonds are issued at a 50 percent discount, i.e., a $100 bond costs $50. The original maturity period is the maximum amount of time required for a bond to reach its face value. The original maturity period for paper EE bonds issued June 2003 and after is 20 years. If the variable market-based rate at which a bond earns interest over its original maturity period is not sufficient for its redemption value to equal its face value at 17 or 20 years, Treasury will make a one-time adjustment to the redemption value.

Original maturity for bonds issued prior to June 2003.

Purchase Limitations

1. What are the maximum amounts I can invest in EE and I bonds each year?

In general, as of May 2003, you can invest up to $30,000 (issue price) in paper EE bonds per calendar year, and up to another $30,000 (issue price) in electronic EE bonds through TreasuryDirect. (The previous annual limitation was $15,000 (issue price) for paper EE bonds.) You can also continue to invest up to $30,000 (issue price) in paper I bonds and up to another $30,000 (issue price) in electronic I bonds in TreasuryDirect. Bonds purchased as gifts or in a fiduciary capacity are not included in the computation for the purchaser. For additional electronic purchase limit information, see our TreasuryDirect web site.

Electronic Savings Bonds (TreasuryDirect)

Treasury is exploring cost-effective ways to accommodate the needs of individuals who wish to invest in TreasuryDirect and who either do not have a personal computer or are not comfortable handling financial business over the Internet. These may include offering access to TreasuryDirect on publicly-accessible computers (for example, at libraries and banks) and partnering with financial institutions to integrate TreasuryDirect into their range of customer services.

2. What is TreasuryDirect?

TreasuryDirect offers you a convenient way to buy, manage, and redeem your Treasury securities online -- no paper bonds or paperwork -- direct from the U.S. Treasury.

Electronic I bonds were introduced in October 2002, and TreasuryDirect was expanded to include electronic EE bonds in May 2003. Since Treasury plans to withdraw the HH offering in mid 2004, these bonds will not be issued in or converted to electronic form in TreasuryDirect.

The TreasuryDirect web site contains a wealth of information about the products and services the system offers.

TreasuryDirect uses Secure Sockets Layer (SSL) software-a widely accepted method for sending secure information over the Internet. This software encrypts all personal and payment information so that it cannot be read as the information travels over the Internet.

Eliminating Paper Savings Bonds

It's Treasury's long-term goal to stop issuing paper securities, but no date has yet been established.

Marketable Treasury securities (T-bills, notes, and bonds) have been issued exclusively in electronic form since 1986. With the advent of personal computers and the Internet, Treasury is now able to offer a practical, electronic version of savings bonds. Treasury has no intention of discontinuing the Savings Bond Program. To the contrary, the steps being taken to move from paper securities to an all-electronic environment will streamline operations and save Treasury millions of dollars annually by avoiding the costs of manufacturing savings bond stock, processing purchase orders, and printing and mailing bonds. Over time, it will also greatly reduce costs for handling claims for lost bonds and other transactions.

Yes, as long as the presenter provides acceptable identification to the paying agent and any other supporting documentation that may be required under Treasury regulations.

Owners of paper savings bonds may continue to hold them in that form, but Treasury will add a convenient feature to TreasuryDirect to encourage them to convert their holdings to electronic form, if they choose. Owners of HH/H bonds will not be able to convert their bonds to electronic form and hold them in their TreasuryDirect account.

5. When Treasury stops selling paper savings bonds, what will happen to the value of paper EE and I bonds that have not reached final maturity and have not stopped earning interest?

The value of paper bonds that are still earning interest will not be affected by TreasuryDirect or the elimination of paper bond sales.

Owners of paper savings bonds may continue to hold them in that form, but Treasury will add a convenient feature to TreasuryDirect to encourage them to convert their holdings to electronic form, if they choose. Owners of HH/H bonds will not be able to convert their bonds to electronic form and hold them in their TreasuryDirect account.

HH Bonds

Owners of HH/H bonds that have not reached final maturity will continue to receive semiannual interest payments until the bonds are redeemed or reach final maturity. When the HH offering is withdrawn, owners of EE/E bonds will no longer be able to exchange them for HH bonds, and owners of matured HH/H bonds will no longer be able to reinvest their holdings in currently-dated HH bonds.

Savings Bonds Direct

Savings Bonds Direct has enabled investors to purchase paper EE and I bonds online at Public Debt's web site and pay for the purchase using a credit card. Since TreasuryDirect offers online purchases but does not rely on paper securities, Savings Bonds Direct will be terminated on December 30, 2003. After that date, investors can elect to purchase electronic EE and I bonds through TreasuryDirect or paper EE and I bonds over-the-counter from a financial institution or through a payroll savings plan until the sale of all paper bonds is discontinued. TreasuryDirect does not accept credit cards.

EasySaver

The EasySaver program allows individuals to schedule automatic purchases of paper EE and I bonds and pay for them via pre-authorized debit from their bank account. TreasuryDirect enables investors to schedule automatic regular bond purchases paid for by pre-authorized debits in the same manner as EasySaver. For this reason, Treasury will not permit investors to establish new EasySaver accounts after December 31, 2003; they can, however, choose to open a TreasuryDirect account and purchase electronic securities on a regular basis. Treasury will continue to service existing EasySaver accounts into 2005.

Your Easy Saver account will NOT be automatically closed. To close your EasySaver account you must complete form PD F 5391-2, Savings Bonds EasySaver Changes, and send it to EasySaver, PO Box 85003, Richmond, VA 23285-5003.

No, the information in your EasySaver account can't be used to establish a TreasuryDirect account.

Through March 2005 you can continue to purchase bonds through your existing EasySaver account. After March 2005, you must open a TreasuryDirect account to continue to purchase bonds as you are doing today.