US Postal Service – Forever Stamp

Effective May 14, 2007, the United States Postal Service (USPS) recently increased the rates to mail a first class letter by two cents to $0.41. Any first class letters mailed after this date with insufficient postages will be returned to the sender for additional two cents. The USPS also added a new type of stamp called “Forever Stamp.”

These stamps are designed to simplify the transition period between future rate changes. In addition, these stamps will provide postage for all future one-ounce first class letter regardless of the new rate. That’s right, they will never expire and will be sold at the new first-class postage rate.

A lot of people are probably thinking of stocking up on the forever stamps to save them money in case the rates increase again. The question is “Is this a good idea?”

A two cents increase from the previous rate of $.39 is a 5.12% increase. Assuming that the rates will increase again next year by two cents, the percent increase from $.41 is 4.9%. If you buy stamps now that will match your postage consumption for two years, you have just made 5% return on your money but only on the value of your second year consumption. Well, this is not a bad investment since most savings account only provide you between 1-2% interest rates. Imagine if you purchase three years worth of your stamp consumption and the rates increase on the second and the third year, you get the idea. Aside from these savings, the stamps provide convenience knowing that you don’t ¬†have to go back to the post office to purchase 2 cents stamp in case you have a lot of stamps leftovers that still have the previous rates. The savings might not be a lot but they would surely add up!! Remember to always try to save money at every opportunity!

However, the disadvantage of buying a lot of stamps in advance is that you are tying up your money to a non-liquid asset. Remember, if you run out of money, you cannot use those stamps as a form of payment! Also, most people have a tendency to misplace stamps.

On the other hand, stocking up might not be so bad at all since most people would probably buy only a few dollars worth even for a three year period. This is because most people are paying their bills online or have establish a direct payment from their accounts.

Please visit the United States Postal Service (USPS) website for the most updated list of all the postal rates.

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