New Postal Rates Are Coming, Should You Stockpile the Forever Stamp?

by Xin Lu on 29 April 2008 11 comments

On May 12th, 2008 the United States Postal Office will be raising the following postal rates:

• First class mail one ounce or less: Up one cent to 42 cents
• Post card: Up one cent to 27 cents
• Large envelope, 2 ounces: Up 3 cents to $1.
• Certified mail: Up 5 cents to $2.70
• First-class international letter to Canada or Mexico: Up 3 cents to 72 cents
• First-class international letter to other countries: Up 4 cents to 94 cents

Going forward, the postal service will also adjust the rates every May according to inflation rates. They only have to give a 45 day notice as long as the changes are within the rate of inflation for the previous 12 months. As a result, millions of people are stocking up on the Forever stamp, which is currently priced at 41 cents. The Forever stamp's cost also rises to 42 cents on May 12th, but Forever stamps purchased at the 41 cent rate can still be used as a first class one ounce stamp without adding postage.

So should you grab as many of these stamps as you can? Well, I think it really depends on how much postage you spend in a single year. If you are only an occasional mail customer like me then purchasing Forever stamps will only save you a few cents a year. However, as Julie Rains points out, you can use the Forever stamp as a 42 cent stamp on mailings costing over 42 cents so stacking the stamps on more expensive mailings could save you a little more. For example, international rates are going up 4 cents to 94 cents so it is possible to use 2 Forever stamps and a 10 cent stamp to cover that cost. The problem with stacking Forever stamps is that it takes a lot of time to save a few cents.

I read a story sometime ago about a man who purchased $8000 worth of Forever stamps as an investment, and I thought that was rather silly because it is probably better to just put that money in a mutual fund or even money market. For the past 36 years postal rate hikes have been lower than the inflation rate. Since the whole point of investing is to beat inflation, betting on Forever stamps is not a very good strategy. Going forward, since President Bush signed the Postal Accountability and Enhancement Act in 2006, it is guaranteed that postal rates will not go above an inflation-based ceiling.

Basically, I think that buying too many Forever stamps is probably not a good idea. They are easily destroyed or lost and you cannot deposit them like money. You could easily estimate how many letters you send a year, and multiply that number by five and ten. That would be the max number of Forever stamps I would buy because you would be set for five to ten years. I am sure most of us probably do not need more than a few hundred stamps. Now if the government introduces a Forever gas stamp that guarantees a gallon of gas for today's price, then I would definitely stock up $8000 of that stamp.

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Guest's picture
G.L.

Sometimes, there are SASE (self-addressed stamped envelope) promotions and contests that can be highly profitable. ;) For example, if you used a loophole in the rules of McDonald's 2006 Monopoly promotion, yo could earn a 333% return on your initial investment - 2 stamps and 2 envelopes. If you want to know more about that promotion, google it, or better yet goto slickdeals.net.... When you buy thousands of stamps, every penny that you save is going to matter, and that's where the Forever stamps come in. :)

Guest's picture
Matt

I heard about everyone stockpiling "forever stamps" too, and it's a silly idea but one that people who don't really understand inflation would easily latch onto. Because the price of stamps roughly follow the rate of inflation, it never actually costs more to buy stamps as time has progressed. The 2-cent and 3-cent stamps of decades past were just as expensive (if not more!) than today's 41-cent stamps.

Not only is it foolish to stockpile, but why would you invest in what's essentially a bond note with 0% (or less) return? If the philatist in you feels like saving a book or two for collectible value, then go ahead, but you're not saving a penny by stockpiling.

Julie Rains's picture

"The reason is that as far as I know the Forever stamp is only good as a single stamp on a piece of first class mail one ounce or under.  You cannot use it as the first stamp on any mailing that costs above the value of the Forever stamp."

My understanding is different. I had this question because I needed to put stamps on my son's report card now to be mailed in June; a note from the school said that I needed to make sure and put $.84 on the envelope. So, I assumed that two Forever stamps would work; but when someone questioned that 2 stamps would work I did some research. I checked out the USPS site:

The value of the Forever Stamp (Liberty Bell) will always be the postage necessary for a First-Class Mail, single-piece, 1-ounce letter that is in effect on the day of use (mailing), unaffected by any postage price changes.

 

I also called the USPS to confirm. I was told that the value of the stamp would be whatever that day's going rate for a regular stamp (first-class, single-piece, 1-ounce letter)  and made sure that 2 Forever stamps would be worth $.84. So you can use these stamps on letters weighing more than 1 ounce.

 

During one of the recent price changes, the Post Office ran out of one-cent stamps so my cost of postage ended up being more than the extra cent.

 

 

Xin Lu's picture
Xin Lu

yup you're right Julie, I found a faq from the USPS that said the Forever stamp can be used on international mail and it will be worth what its value is on the date you use it. 

Guest's picture
FrugalZen

I don't believe you can use the Forever Stamp on International Mail.

I base this on several years ago when we had a Postal Rate increase around Christmas and they issued the Christmas stamps with a Letter not Number designating the price.

I asked about using them for some cards going to europe and was told they could not be used because the FOREIGN Post Office would not be able to tell if the proper postage had been applied...meaning if their was a mistake here THEY couldn't collect the "Postage Due" and in all probability the card would be either returned to me for "Proper" Postage or sent to their version of the Dead Letter Office.

~ Roland

Xin Lu's picture
Xin Lu

G.L.  I know about the monopoly promotion.  I participated in that and got a lot of stuff.  The thing is you can't really count on that happening again. It also takes a lot of time and effort to buy stamps and do those promotions.  It's better to just buy the stamps online and print it onto your envelopes. 

Guest's picture
Jeremy

I don't look at forever stamps as a way to save money or beat the rising cost of stamps. I see them as a way to avoid the hassle of using varying amounts of penny stamps. I don't use stamps very often, so I've always avoided buying anything more than a book at a time. I didn't want to wind up with more than a half book of stamps, and trying to remember if I needed to add one or 4 penny stamps.

Now that a forever stamp will always be valid for a normal first-class letter (which covers 99% of non-package mail items I send) I can buy a roll of stamps, which is a lot more convenient, and not have to worry literally 2 years down the road whether I need to put 2 or 6 penny stamps on the envelope so it doesn't get returned to me.

It wasn't horribly difficult to remember to put 2 penny stamps on a 39 cent stamp, but it was a huge hassle trying to figure out how many penny stamps had to go along with a F stamp in order to mail a letter. The letter denomination stamps was the dumbest thing the post office ever did. They should have treated those as "forever" stamps and it would have avoided a lot of headaches.

Xin Lu's picture
Xin Lu

FrugalZen, please see this faq from the USPS about using the Forever Stamp on international mail:

http://www.usps.com/ratecase/ratecase_faqs.htm

Can the Forever Stamp be used for International Mail?
Yes, but keep in mind, the postage value of the Forever Stamp is the domestic First-Class Mail single-piece 1-ounce letter rate that is in effect on the day of use (mailing). Since the international postage rates are always higher than the comparable domestic rates, additional postage would have to be affixed.

Any nondenominated stamps (except for those that bear unique markings, such as First-Class Presort, Nonprofit Org.) may be affixed to items that are sent to foreign countries. The postage value of such stamps is linked to its appropriate domestic rate (e.g., the "Lady Liberty and U.S. Flag" stamp has a postage value of 39 cents).

Guest's picture
FrugalZen

MMMmmm...I stand corrected at least as far as their stated policy.

I do understand the old reasoning I went by...without a notation on the stamp of its denomination/cost how would a postal clerk in other than the US know how much it was worth..and the Forever Stamp does not have one.

I was sending cards to Malaysia and the postmaster told me the stamps I had then with just the letter on them and in other countries it would seem I was using nothing more than stickers like you get from gumball machines instead of true postage stamps.

Live and learn}:~D

~ Roland

Guest's picture
Guest

When gas gets to 8 dollars a gallon in a few years, that forever stamp will be worth one dollar.

Guest's picture
Marisa

Gosh...I didn't even know there is another increase. I suppose with everything else going up.... I have never heard of "forever stamps". Interesting. Thank you.

-Marisa
www.mtidbits.com/blog