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URL:  http://boards.fool.com/treasury-zero-percent-cert-of-indebtedness--22129109.aspx

Subject:  Treasury Zero-Percent Cert of Indebtedness ? Date:  2/27/2005  10:14 AM
Author:  math999man Number:  11938 of 35343

I was just visiting the treasury direct site and see a new purchase option (see below ) - Why would anyone want to do this and fund an account that does not pay interest - when if u purchase a security, the $ is transfered from your linked bank account ? Why use this Cert ?





Zero-Percent Certificate of Indebtedness

The Zero-Percent Certificate of Indebtedness (Zero-Percent C of I or simply, C of I) is a Treasury security that does not earn any interest. It is intended to be used as a source of funds for traditional Treasury security purchases.

You may build the amount held in a C of I a number of ways:

* Follow the Funding Options directions in Manage Direct to schedule regular payroll deductions with your employer or electronic deposits with your financial institution.
* Select "Zero-Percent C of I" as the Product Type on Buy Direct to withdraw funds from a designated bank account (maximum of $25.00 per transaction).
* Redeem securities in your TreasuryDirect account to "Zero-Percent C of I" instead of a traditional bank account.

Once you establish regular electronic deposits toward the purchase of your C of I, you can use it to schedule security purchases up to five years into the future. After you've accumulated enough for the security you wish to purchase, simply select "Zero-Percent C of I" as a source of funds in Buy Direct, and the security is purchased. For your convenience, should your C of I balance be insufficient to cover a scheduled security purchase, money being deposited toward the purchase of your C of I the next business day will be used to issue your security.

There's no limit to the amount you may hold in your C of I. All purchase and redemption activity is conveniently recorded in your C of I History.

Unexpected changes in your plans? Choose the option to redeem your C of I, and the amount you enter is redeemed from your C of I and deposited into your designated bank account.
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