By David Enna, Tipswatch.com
Over the last decade, I’ve been a defender of TreasuryDirect despite its dated website, awful tax forms and cryptic communications. In almost all cases, it has worked for me. Acceptable and most importantly, secure.
But now, weighed down this week by massive demand for U.S. Series I Savings Bonds, the site has repeatedly gone dead, failed to load, loaded a page or two and then stopped. Thousands of potential Treasury customers are furious, and some of them weren’t even looking to buy I Bonds. I’ve heard from people trying to place an order for a 4-week Treasury auction yesterday, but were locked out.
The Wall Street Journal reported yesterday that just in the final week of October, the Treasury issued $1.95 billion in I Bonds, more than the total for fiscal year 2021. In one year, 3.7 million new accounts were created on the site, more than the 2.4 million for the prior 10 years combined.
Why is demand so high? Because the I Bond’s variable rate will reset from 9.62% to 6.48% on Nov. 1. (The fixed rate could also change, but that is uncertain.) People who lock in an I Bond order before Nov. 1 will get 9.62% annualized for six months, and then 6.48% for six months. That adds up to a compounded return of about 8.2% over 12 months. Even if the investor sells after 12 months and takes a 3-month interest penalty, the return would be over 6.5%. That’s very attractive.
TreasuryDirect has responded to this overwhelming demand by posting this message on its homepage (viewable when you are lucky enough get to the homepage):
“We are currently experiencing unprecedented requests for new accounts and purchases of I Bonds. Due to these volumes, we cannot guarantee customers will be able to complete a purchase by the October 28th deadline for the current rate. Our agents are working to help customers who need assistance as quickly as possible.”
This message is typically cryptic, because it’s impossible to tell if it means all electronic orders are at risk of not being filled, or is it addressing issues with its customer service staff trying to answer phone calls dealing with purchases and account set ups?
Elsewhere on the site, TreasuryDirect says:
“You must complete your purchase and receive a confirmation email by October 28, 2022, at 11:59:59 PM ET. I Bonds purchased by this deadline will have an October 1st issue date. You will receive the published rate for six months (i.e., October – March).
“Due to high volumes, we cannot guarantee that your bond purchase will be completed before this deadline if your account or purchase requires additional customer support for issues such as identity verification.”
That statement seems to imply that it is people needing human customer support that are most at risk of not completing the purchase. But I’ve heard from many people with active TreasuryDirect accounts who have been able to get into the site, get all the way to the I Bond purchase confirmation page, and then have the site crash. Repeatedly. Those people haven’t completed the purchase and can’t complete the purchase. But they need to keep trying.
TreasuryDirect says you must receive a confirmation email to confirm your order has been placed.
Today — Friday, Oct. 28 — is the day TreasuryDirect originally said would be the last day to place an order to be assured of getting an October-dated I Bond and that 9.62% for six months. I had been recommending making the purchase by Wednesday, Oct. 26, but unfortunately that is the day TreasuryDirect started crashing.
What happens after Oct. 28? This is what TreasuryDirect says:
“Due to processing and payment settlement timeframes, bonds purchased in TreasuryDirect October 29 through October 31 will be issued in November. As a result, these bonds will receive the rate announced by Treasury on November 1. This rate will still be applied for the next six-months (i.e., November – April).“
What TreasuryDirect needs to do
No. 1. Commit that all I Bond orders placed by midnight today will be recognized as October-issued I Bonds. This is an electronic system, so you know when the order was placed. You need to honor your statement that Oct. 28 orders would be completed before Nov. 1.
No. 2. Have Treasury staff work this weekend to continue helping customers set up accounts and complete orders. Make sure communications are going out to customers who have completed orders. Extend that Oct. 28 deadline for all people who have made good-faith attempts to complete the purchase by Oct. 28.
No. 3. Repair your website so that this sort of problem never happens again. TreasuryDirect is the only place an investor can buy an I Bond. It needs to work, no matter the demand.
Friday evening update
TreasuryDirect is closing down for maintenance this weekend, but that still doesn’t mean that I Bond orders completed by 11:59 p.m. won’t be accepted as an October issue. This is from a Barron’s article:
The Treasury’s website will undergo maintenance this weekend after record demand for series I inflation-linked savings bonds strained the system. Work on the TreasuryDirect website will start at 12 a.m. Saturday and continue until 11:59 p.m. Sunday Eastern Time.
During that period, individuals won’t be able to use the account management system that allows purchases of I Bonds. The rest of the site will be up and running.
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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.