Starting January 1, 2012 we will no longer be able to walk into our local bank and purchase a US Savings Bond - at least not the traditional paper form. US Savings Bonds are NOT going away - they are only going to be sold in "electronic form" via www.TresuryDirect.gov
Here is the press release from back in July.
I have always liked the I Savings Bonds that guarantee an interest rate above inflation. They accrue interest but the interest is not subject to federal tax until you redeem the bond and is completely exempt from state or local income tax. If you use the proceeds for education expenses, you may not owe any federal tax at all.
These made great gifts. Giving an "electronic" savings bond as a gift seems a bit disappointing to me and more complicated. You will need to know the recipient's full name, social security number, and their Treasury Direct account number. This of course means the recipient (or their parents) will have had to set up an account at Treasury Direct in the first place. So, I imagine if you want to give a gift you will need to say "Hey, I'd like to give you a complicated gift. Would you please go online to www.TreasuryDirect.gov and set up an account so I can surprise you with a gift?" Although, Treasury has set up a couple of different gift announcement forms you can fill out online.
I would not be surprised if this turns out to be an unpopular move by our Treasury. I wonder if sales of US Savings Bonds will drop significantly? And if they do drop, will Treasury reverse the decision?
I may just go to the bank next week a buy a few of the old paper bonds just for fun.