TreasuryDirect Seems Like More Trouble Than It Is Worth
In reading through my blogroll, I came across a couple references to using TreasuryDirect.gov to purchase savings bonds as an alternative to high yield savings accounts. I figured it was worth looking into, so I signed up on the website. The registration process was a little awkward, and you can’t log in until they mail you a security card. That was annoying, but I was willing to live with it.
They obviously care about the security of each account. I found the security features to be more intrusive than I think it is worth. The virtual keyboard was the worst. A password that I can type in 1 second takes about 30 seconds to enter when you have to use an on-screen keyboard with randomly placed characters. It is even more of a pain when having to look up characters from your security card at the same time.
After logging in, it took me a little while to figure out how the system worked. It is kind of fascinating once I figured everything out. This is essentially the ‘front line’ where the national debt is traded each day. I found it interesting to see how many billions of dollars are auctioned off each week (pdf).
Initially, I was looking for an interest rate on the bills so I could decide how I might invest. But the treasury notes and bills don’t have a set interest rate. The $1000 bills are sold at a discounted rate that is determined by auction. As an individual user at TreasuryDirect, you have the option of submitting ‘noncompetitive bids’ on the bills. This means that you accept whatever rate that is determined by the competitive bidding process. From what I gather, the competitive bids are submitted by banks and investment companies and the like.
Unfortunately the going interest rate is a little lower than what I’m looking for. 4% seems to be about the upper limit of what is available for treasury bills. Since I can get that rate on a money market savings account, I think I’ll stick with those since the treasury bills are less
