The Treasury Department on Tuesday unveiled a savings bond Web site, saying Internet distribution could boost dwindling sales of the securities.
"What we're trying to do is build a new economy based on old virtues," said Treasury Secretary Lawrence H. Summers. "Savings is an old virtue. We are promoting savings in new ways."
With the move, the Treasury is cautiously dipping its toe into electronic-commerce waters. Initially, credit card purchases at www.savingsbonds.gov will be limited to $500 per visit.
"All you need is a Visa or MasterCard and access to the Internet," Mr. Summers said. "We think that, done right and carefully, the sale of savings bonds to individuals can boom."
Until now, savings bonds have been sold in person at 40,000 financial institution branches nationwide, on-line by 100 financial institutions, through a direct purchasing plan with the Treasury that automatically deducts from bank accounts, and through employer payroll plans.
The Web site announcement came a day after the Treasury announced a hike in savings bond yields. The rate on series EE savings bonds bought after May 1997 was raised to 5.19%, from 4.31%. The rate for inflation-indexed bonds bought within the next six months was increased to 6.98%, from 5.05%.
"Returns like that have proven attractive," Mr. Summers said. "Inflation-indexed bonds account for an 11% share -- and a growing share -- of savings bonds."
Sales of all savings bonds for fiscal year 1999, which ended Sept. 30, totaled $4.69 billion, down from $4.8 billion in 1998. Inflation-indexed bonds, introduced Sept. 1, 1998, offset the decline somewhat, totaling $455 million during fiscal 1999.
Sales of savings bonds have suffered in the face of the sustained bull market in stocks. For instance, 80% of this year's decline in savings bond sales is attributed to a decrease in employer payroll savings plans as employees opted to put retirement savings in equities, according to the Treasury.
Yet many Americans are not saving at all, Mr. Summers said. "If we are to succeed to reduce our trade deficit and dependence on foreign capital while maintaining strong growth," he said, "there is no alternative to raising the amount that Americans save." ?