Some people want to use credit cards for almost every purchase, but trying to use a credit card to purchase a savings bond may be more trouble than it's worth. The U.S. Department of the Treasury once allowed the use of a credit card to buy savings bonds, but as of the date of publication it only accepts payments made by debit from a checking or savings account.
Savings bonds provide a safe way to earn a little bit of interest on your money. In the past you could buy paper bonds, but now all bonds are only available in digital form. Savings bonds are issued by the Treasury Department and are fully backed by the federal government, so they won't lose value if the market changes. The main downside is that the interest is usually not as high as other investment methods, and bonds can't be cashed in during the first 12 months. If you cash your bond within the first five years, you'll have to pay a penalty that equals the last three months of interest.
Savings Bonds Direct
The Treasury Department used to offer a method for purchasing savings bonds directly with a credit card via its Savings Bonds Direct program. Customers could get airline miles, cash back or other rewards with their purchase, depending on which credit card they used. The Treasury Department discontinued Savings Bonds Direct at the end of 2003 in order to save on merchant fees it had to pay when people bought bonds with credit. Customers now must purchase credit cards through the TreasuryDirect website.
If you are buying a savings bond for someone else, you'll need that person's Social Security number in addition to your own. If the bond is for someone else, it will be kept in an electronic gift box on the website until the recipient creates his own TreasuryDirect account to redeem the bond. At that point, the bond will be deposited into his account and he can log in at any time to see its current value.
Alternative Credit Card Route
- Jupiterimages/Photos.com/Getty Images
- What Is a Single-Purpose Credit Card?
- How Do Cash Rebates Work?
- How to Purchase Saving Bonds
- How to Cash in EE Savings Bonds
- Characteristics of Credit Cards
- The Best Way to Spend Money to Earn Credit Card Rewards
- How to Check the Balance on a Treasury Savings Bond
- Can You Put Savings Bonds in a Brokerage Account?