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Author: Berkut Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35259  
Subject: I Bond Issue Date Date: 10/29/2001 1:45 PM
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I just visited the savings bond site to purchase an I Bond and there was a note that any bonds purchased today may have a November issue date.I thought as long as the purchase was made in a given month,no matter how late in the month,the issue date would show that month.Any comments?
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Author: foobar73 Big red star, 1000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2298 of 35259
Subject: Re: I Bond Issue Date Date: 10/29/2001 2:20 PM
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I just visited the savings bond site to purchase an I Bond and there was a note that any bonds purchased today may have a November issue date.I thought as long as the purchase was made in a given month,no matter how late in the month,the issue date would show that month.Any comments?

From http://www.savingsbonds.gov/sav/sbdfaq.htm :

Q: If I buy a bond at the end of the month, what issue date appears on the bond?
A: The issue date of your savings bond indicates the month and year the bond starts earning interest. It's printed in the upper right hand corner of the bond. Usually, if you buy a bond during the month of February 1999, the issue date is printed as "February 1999" on the bond. However, if you buy the bond at the end of the month, your bond's issue date may be the following month. For example, if you buy a bond on February 28, 1999, your bond's issue date will probably be March 1999. The savings bond issue date is determined by the date we receive funds from the credit card association. This usually happens quickly--within 1-2 business days--so it only affects end-of-month purchases.


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Author: Berkut Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2302 of 35259
Subject: Re: I Bond Issue Date Date: 10/29/2001 6:51 PM
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Thank you foobar for your response. I thought as long the order was accepted and an order number was assigned the date was locked in then.Now I know better.

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Author: questionthefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2319 of 35259
Subject: Re: I Bond Issue Date Date: 11/1/2001 1:37 PM
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The official rule is that they have to get the cash in hand and then the date is locked in. I just received the following mail today with the special exception for those who bought it online in the last few days of October.
----
For any question you may have regarding the issue date of a purchase made today, please read the following:

Regulations state that the issue date of the bond is based on the date we receive funds from the card issuer. Usually, it takes 2-3 business days to receive the funds. If you buy a bond near the end of the month, your bond's issue date may be the following month. For example, if you buy a bond on November 29, 2001, your bond's issue date will be December 2001.

At the end of October a number of unique circumstances coincided creating a situation where a large number of customers were unable to complete their orders. We were unable to notify these customers of alternative ways to purchase bonds in a timely manner.

Based on the extraordinary circumstances, we waived the regulations determining issue dates for the month of October. All online orders received in October will receive the issue date of 10/01.



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Author: Littlechap Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2323 of 35259
Subject: Re: I Bond Issue Date Date: 11/1/2001 3:53 PM
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The official rule is that they have to get the cash in hand and then the date is locked in. I just received the following mail today with the special exception for those who bought it online in the last few days of October.
----
For any question you may have regarding the issue date of a purchase made today, please read the following:

Regulations state that the issue date of the bond is based on the date we receive funds from the card issuer. Usually, it takes 2-3 business days to receive the funds. If you buy a bond near the end of the month, your bond's issue date may be the following month. For example, if you buy a bond on November 29, 2001, your bond's issue date will be December 2001.

At the end of October a number of unique circumstances coincided creating a situation where a large number of customers were unable to complete their orders. We were unable to notify these customers of alternative ways to purchase bonds in a timely manner.

Based on the extraordinary circumstances, we waived the regulations determining issue dates for the month of October. All online orders received in October will receive the issue date of 10/01.


So much for "regulations!"

I logged on on 10/30 and I saw the big sign at the top of the page that said "Your purchase may receive a November date" or words to that effect. I wonder what the "exceptional" circumstances were that made it impossible for people to read all of a sudden.

Well, anyway I took the advice posted right there on that same website: "go to any bank." So I got out of my chair and actually left my computer <gasp!> and walked three blocks to my local bank. There I was able to write a check, buy some bonds, and get a receipt with the date 10/31, signed and stamped and processed. Now I just wait to get the bonds in the mail.

BTW the bank didn't offer to take a credit card, but they did hand me a copy of my official purchase order, with the October 31 date and time stamped right on it. I've been reading for days about people worrying over the date thing and the credit card thing yadayadayada. Next time this happens, if it ever does, I strongly advise people who are worried about the security and timing to simply stroll into a bank. If you make sure to have the money up front you won't have any rude shocks when the credit card bill arrives.

(I'd be fascinated to know how many Americans went to that site, bought with a credit card, then missed the deadline on the next month's payment -- or couldn't afford to pay it down to zero -- thus incurring credit card interest that could wipe out 2 or 3 months worth of earnings on the bonds. Also curious whether people who float the money for two or three weeks actually *invest* that money for the intervening time, thus taking advantage of the float, or instead just wait for the bill and waste the opportunity.)

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Author: questionthefool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2324 of 35259
Subject: Re: I Bond Issue Date Date: 11/1/2001 4:04 PM
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Littlechap has a point. One has to be very careful playing with fire, the credit card system. The credit card issuer knows a percentage of people will pay some interest on these purchases and count on that money.

I am not investing the float money. It is in money market account earning 3%. This interest is just some lunch money, that is all.
To maximize my cash back from Discover, I nagged Discover to increase my credit limit a lot. They did not give me all I wanted but more than doubled my then existing limit. No complaints, rather greatful that they did that in time ( with 4 days to spare before the end of the month). I can only declare a minor 'victory' once I pay the credit card bill in full, which I have every intention of doing.

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Author: foobar73 Big red star, 1000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2328 of 35259
Subject: Re: I Bond Issue Date Date: 11/1/2001 4:39 PM
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...Based on the extraordinary circumstances, we waived the regulations determining issue dates for the month of October....

I logged on on 10/30 and I saw the big sign at the top of the page that said "Your purchase may receive a November date" or words to that effect. I wonder what the "exceptional" circumstances were that made it impossible for people to read all of a sudden.


The "exceptional circumstance" was that American Express started charging bond purchases as cash advances on 10/26, rather than as regular purchases, as promised. Not only did people start getting hit with cash advance fees and interest, but cash advances are limited to a lower amount than the usual credit limit, and so some people were unable to buy all the bonds they wanted. Enough people complained about this that Treasury Direct had to stop accepting Amex, and extend the deadline for those affected.

The Online Banking board has more lurid details, plus some first-hand accounts, I believe.

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2334 of 35259
Subject: Re: I Bond Issue Date Date: 11/1/2001 10:23 PM
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BTW the bank didn't offer to take a credit card, but they did hand me a copy of my official purchase order, with the October 31 date and time stamped right on it.

If you are referring to your bank instead of the Public Debt web site, your bank would have to take a cash advance on the credit card to send the Public Debt funds for paying for the savings bonds.

The treatment of purchasing savings bonds as a "purchase" is only when you deal directly with the Bureau of Public Debt, such as their web site for puchasing savings bonds.

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Author: Littlechap Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2339 of 35259
Subject: Re: I Bond Issue Date Date: 11/2/2001 12:48 AM
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Responding to my earlier post, foobar73 wrote:
The "exceptional circumstance" was that American Express started charging bond purchases as cash advances on 10/26, rather than as regular purchases, as promised. Not only did people start getting hit with cash advance fees and interest, but cash advances are limited to a lower amount than the usual credit limit, and so some people were unable to buy all the bonds they wanted. Enough people complained about this that Treasury Direct had to stop accepting Amex, and extend the deadline for those affected.

The Online Banking board has more lurid details, plus some first-hand accounts, I believe.


Woof, what a mess. Thanks for the details! That explains the other message I saw (along with the date warning) that Amex was not being accepted.

I am slightly curious why Discover is allowing these sales to be processed as purchases... except that they are in a royal battle for market share, and perhaps they figure they'll give a little gift to cardholders in to get one over on Amex.

I mean, if you think about it, this *should* absolutely be a cash advance. You're not buying a commodity and the seller does not work on a 30-day invoice basis the way many businesses do. These bonds are worth their full face value from Day One. If you pay $10,000 then you get $10,000 worth of bonds. So you're really just buying money.

So I think the Amex decision was logical, but I don't know how it's going to play out in the marketplace. Interesting situation. Thanks again for the info!

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Author: Littlechap Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2341 of 35259
Subject: Re: I Bond Issue Date Date: 11/2/2001 1:07 AM
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"BTW the bank didn't offer to take a credit card, but they did hand me a copy of my official purchase order, with the October 31 date and time stamped right on it."

If you are referring to your bank instead of the Public Debt web site, your bank would have to take a cash advance on the credit card to send the Public Debt funds for paying for the savings bonds.

The treatment of purchasing savings bonds as a "purchase" is only when you deal directly with the Bureau of Public Debt, such as their web site for puchasing savings bonds.


Hi Mark,

I understand that. My comment about the bank taking credit cards was facetious. As I noted elsewhere, I consider this to be buying money and I would not expect the bank to give me negotiable instruments on an unsecured credit source like a credit card, even if the government site is doing that with Discover and others. I think the whole think is kooky.

My bigger point, not emphasized in your reply, is that I walked out with a nice paper receipt proving the date and time at which the bonds had been purchased. So, by going to the bank I avoided all the quibbling over which date the bonds would bear, and which interest rate I'd be getting.

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2342 of 35259
Subject: Re: I Bond Issue Date Date: 11/2/2001 1:14 AM
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My comment about the bank taking credit cards was facetious.

Certain aspects of humor totally fail to come across in this media.

Also, people on another board have talked in seriusness about using their credit cards at a bank to purchase I-Bonds, not realizing that in such circumstances it is a cash advance.

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Author: auslander Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2343 of 35259
Subject: Re: I Bond Issue Date Date: 11/2/2001 5:44 AM
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And, if you are using a credit to purchase I Bonds online, as I do, be certain that you have sufficient funds available to pay the monthly credit card bill in FULL to avoid paying finance charges. Finance charges would surely negate the 1% cash back rebate on credit cards that many of us are using.

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2346 of 35259
Subject: Re: I Bond Issue Date Date: 11/2/2001 9:34 AM
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I am slightly curious why Discover is allowing these sales to be processed as purchases... except that they are in a royal battle for market share, and perhaps they figure they'll give a little gift to cardholders in to get one over on Amex.

Previously, the savings bond purchases were treated as retail purchases. That means that of your $1000, 2% or so goes to the credit card company and $980 goes to the Bureau of the Public Debt. Way back when rates were 6%, this amounted to about 4 months' interest. The way the treasury got its money back is to hit you with the 3 months' interest penalty for cashing it in early. Also the rate is a little bit less than it "should" be. [But the point is, the credit card companies aren't losing any money on your purchase.]

Why was the government willing to do things this way? My hunch is that when you buy a savings bond at a bank, the bank gets to keep some of the initial amount as a commission.

The big mystery is why AmEx decided to mess with its cardholders. The account agreement allows them to do so (if you use the AmEx card to buy anything that's readily convertible to cash, such as casino chips, money orders, or lottery tickets, AmEx reserves the right to count it as a cash advance). Why did they pick now? Probably because a lot of people were buying the bonds near the beginning of their statement cycle with a "rewards" card. Maybe AmEx thought "We want to earn some interest and not pay out the rewards".

Anyway, just idle speculation.

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Author: LimShady Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2347 of 35259
Subject: Re: I Bond Issue Date Date: 11/2/2001 12:10 PM
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The big mystery is why AmEx decided to mess with its cardholders. The account agreement allows them to do so (if you use the AmEx card to buy anything that's readily convertible to cash, such as casino chips, money orders, or lottery tickets, AmEx reserves the right to count it as a cash advance). Why did they pick now? Probably because a lot of people were buying the bonds near the beginning of their statement cycle with a "rewards" card. Maybe AmEx thought "We want to earn some interest and not pay out the rewards".

Anyway, just idle speculation.


Well, given their past history of the bait-and-switch (remember the free trading in an AmEx account), I'm less inclined to give AmEx the benefit of the doubt.

Chris

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