I bonds - is dealing with treasury direct worth it?

I signed up for a treasury direct account recently to buy I bonds and they immediately froze the account due to being unable to verify it is actually me. Now I have to mail in a notarized form with my ssn if I want the account unlocked which I’m not exactly comfortable with due to I’d theft. Anybody know if this is common? I’m starting to wonder if it’s worth all the trouble since it says to allow for 13 weeks maybe more due to the busy schedules of those efficient government workers; then again it is a pretty appealing interest rate these days. Anyone else had to jump through all these hoops to buy I bonds?

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It’s not a notarized form, it’s worse. It’s a Medallion Signature Guarantee. It’s really up to you. If you have a way to get the MSG, I’d go ahead and do it. The thing we don’t know is how long this inflation will last. The IBond you buy won’t be as good an asset once inflation dies down again. In my case, I do all my finances online and not with a GMMB, so I don’t have an easy way of getting the MSG. I loathe MSGs, they’re false security.

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I’m so sorry you’re having problems from the start. No, it’s definitely worth it. It’s a marathon, not a sprint. Even if you have to open an account with an unsavory bank just to get the MSG, do it, then close it after you get the MSG. I have been buying I-Bonds since 2016, the max for me, and $5000 in paper I-Bonds as Federal tax refund. My wife is not involved, because we never wanted TWO of these cumbersome accounts, but now we have six figures in I-Bonds, and nearly $1000 in interest every month, tax-deferred, State tax exempt forever, no default risk (well… we thought the USSR would last forever too). Maybe with more funding the website and customer service get better. Keep at it !!!

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Technically not forever; 30 years. You may be older–I think the OP was talking about his son.

For me 30 years is probably forever, even my oldest I-Bonds will mature fully when I’m 85, close to end of life.

It happens a lot.

Some people try to change their bank account info once they have their Treasury Direc t account open and go through same situation. I think the Bogleheads forum has tons of stories about accounts being frozen.

When you define a bank(s) make sure it’s a “forever” bank. In my case, I added Fidelity Cash Management and Schwab Bank. I will never let those go.

Just so we are clear, the unsavory banks are those that are large and that have local branches, while the savory banks are those that are large and do not have local branches, right?

Well let’s keep things in perspective, are you looking for a complete answer or something specific to MSG? There’s not much harm in opening an account with an “unsavory” bank to get an MSG, the problem is you may have to pay fees like a monthly service fee, or keep a minimum balance there, and you will have to have the account open for a certain length of time (6 months?) before the person behind the big desk will give you the MSG stamp. I think there’s maybe a thread on bogelheads of which banks are quicker to get the MSG from. The thing is, like a notary it needs to be done in person. Some “savory” banks have a limited number of local brick-and-mortar branches (investor centers) in larger markets, but in my experience although they have staff certified to give an MSG, they will only do it for paperwork directly related to doing business with the brokerage firm, so they likely wouldn’t do it for you even as a long standing customer if the paperwork was related solely to TreasuryDirect. At least that has been my experience.

In the larger picture, it isn’t necessarily size that is the issue. A few things have happened in the financial industry over the last 30+ years since deregulation, including that a) the distinction between “banks” and “brokerages” is not as distinct, and b) merger activity eliminated much of the competition between “banks” (basic checking, savings accounts, etc.) once state boundaries were removed from bank regulation. The banks were also never punished for the whole Great Recession and have a typically customer-unfriendly (think monopolistic) mindset that goes unchecked since their political donations control the people in DC who are supposed to regulate them. But I digress into a rant.

There are still some cases, such as small businesses that deal in a lot of cash, that may need to deal with the “unsavory” banks as their best option, but for 95% of us they aren’t a great deal now.

The savory players are typically;

  • Online brokers such as Fidelity, Schwab, Vanguard
  • Online banks such as Ally
  • Credit Unions or small local banks

The unsavory players are typically;

  • Large national banks like Chase, Bank Of America, Citi, Wells Fargo
  • Full service brokers like Goldman Sachs, Merrill Lynch, Edward Jones

By not having a network of local branches the online brokers are able to save money and there has been more competition in that space driving down commissions/fees for the past 30 years. They don’t rely on sales-focused brokers the way full-service firms do. You can do most “banking” (check writing, ATM withdrawal) activities through brokerage accounts now, but some activities like this MSG and cash deposits are problematic with online-only and online-mostly banks and brokers.

So, your options for an MSG are with a national bank where you just have to watch you won’t be fee’d to death before you can get the stamp, or a credit union or local bank, where you can probably get a “free” checking account that is actually “free” but beyond that are unfortunately not great places to save money as far as ROI.

I wrote a long answer to this, but went back to edit one word and now its been quarantined by the AI. I don’t know if staff ever actually reviews these like they say. So, I can’t type it all again.

If we are just talking about getting an MSG, it’s ok to get an account at a large national bank for a while (you’ll typically need to have it for 3-6 months before they’ll do the MSG–I think there’s a bogelheads thread about which FI’s might give one sooner). You just need to be careful about low balance, inactivity and other nuisance fees, since that is a big part of their business model now, not actual lending/saving.

Some of the online brokerages do have brick-and-mortar investor centers in major markets, but in my experience they’ll only do MSGs on documents directly related to your accounts with them. So, they won’t do an MSG just for Treasury Direct even if you were a long-standing customer of decades unless you’re a good sweet talker.

An alternative would be a credit union or a small local bank. They’ll often have truly free simple checking accounts, but usually aren’t great as your balance grows as their technology is usually behind the curve and they can be better places to borrow money than save it. That’s not your concern though if you are mainly interested in the MSG.

About 35 years ago the whole finance industry had a tectonic shift as it was deregulated. The distinction between banks and brokerages blurred and a handful of banks grew huge through mergers because they were no longer regulated or bound to do business within a single state. The banking industry also heavily lobbies (read bribes) congress and the agencies that are supposed to regulate them. They’ve gone unpunished for their role in the Great Recession and maintain consumer unfriendly practices because of that. But I digress into a rant.

It is not really about size per se, but not having networks of tens or hundreds of physical branches in every city lowers the operating costs significantly for online-only or online-mostly banks and brokerages. It does mean that a few activities are harder with the online institutions. This MSG nonsense is one of those; another example would be a small cash-based business that needs to make frequent deposits.

What this thread is calling savory banks are typically;

  • low cost online brokers like Schwab, Fidelity, Vanguard
  • online banks like Ally
  • local small (say 10 or less branch) banks and credit unions
    What this thread is calling unsavory banks are typically;
  • the large national banks like Chase, Citi, Bank Of America, Wells Fargo
  • full service brokers like Merrill Lynch, Goldman Sachs, Edward Jones, Raymond James etc.

Sorry about the formatting at the end or any typo above, but I’m not going to fix it or I’ll be sent to the penalty box again.

Fidelity local branch did give me an MSG, I was linking TD to Fidelity though, of course.

And they might for something non-Fidelity related. I’m not speaking definitively, just cautioning. My specific experience is more with Schwab when my mom died. I’ve gone to Fidelity for a non-Fidelity related notary, but I suppose a notary’s duties aren’t directly related to Fidelity so to fulfill their commission they must be available to anyone. I’m not sure why MSG would be much different except that it incorporates the “know your customer” aspect. They shouldn’t be allowed to vouch for your identity in some transactions but not others. Or, as in your “do it, then close it” comment above give this to transient customers. It’s a flawed system of establishing trust.

On the same form I added Fidelity Cash Management and Schwab Bank Checking so I pwned Fidelity a tiny little bit … :slight_smile:

First off. You cannot get a medallion signature guarantee by opening up an account, getting the guarantee, and then closing the account. You cannot get the guarantee unless you have been a customer for 6 months. That’s one of the reasons why it’s ‘safer’ than a notary, for example.
Dealing with the US treasury these days is a genuine dumpster fire. Open an account at your own risk! ANY issues or problems and you will have the account shut down or worse. You then get a computer generated email stating “we’re busy. We will get back to you via email in 6 months!!!” This means that: ANY glitch and you are hosed. Avoid I bonds like the plague…I don’t care how much interest they pay, it isn’t worth it! (just my opinion). My Aunt passed away and she “lost” three I bonds on treasury direct (she forgot her password and the answer to her security question…alzheimers). I’ve been hunting for these three bonds for 2 1/2 years now. I am now waiting for another email response this December. As executor I can’t close her estate or distribute any inheritance until the treasury responds. Already two of her heirs have passed away with no money distributed, while the entire estate is waiting on the “BUSY” US Treasury!

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That’s scary! But truth be told, I had some concerns about trusting a govt computer with my money. Hopefully I won’t have your problems with my Ibonds. Gonna check my account right now. Thanks for sharing

Thanks all. I’ve got an account at a local credit union and was able to get the msg so I’m gonna mail the account authorization form in to treasury direct tomorrow and hope for the best. I don’t like sending my social security number through the mail but I’ll jump through the hoops for now.



Social Security through the mail is way safer than Social Security through the Internet!!!

Wow, I’m surprised it’s gotten so difficult. I opened a TD account last fall to convert my paper bonds, and purchase new ones. I guess I was lucky – it took a little while, but there were no demands for guaranteed signatures, etc.
Not sure what the difference is…

It might have been easier if she had the bonds “payable upon death”, then it doesn’t have to go through estate probate, etc. But the inheritors might need a TD account to transfer/sell the bonds to, I think.