Savings bonds. Can you think of a duller financial instrument? They're the low-interest rate gift from Grandma, the sure- thing place to put a few thousands bucks.
Beginning January 1, paper savings bonds will be a thing of the past. The only way to purchase a savings bond in 2012 and beyond is electronically through www.treasurydirect.gov. It's a move that is expected to save taxpayers$120 million over five years.
But purchasers, who tend to be older, have been complaining, said John Wagner, vice president at Wings Financial Credit Union. He said branches have had signs up noting the elimination of over-the-counter paper savings bonds. Wagner said they've also seen an increase in sales, but it's tough to know if the increase is due to the end of paper bonds or the end of the year Chrsitmas rush, he said. Not everyone has shifted from savings bonds to iTunes gift cards for Junior.
The U.S. Treasury Department said there was no increase in demand from July, when the change was announced, through the end of September, which is the most recent data available. Most banks have said they are actually seeing a decline in demand.
For a savings tool that has largely been forgotten, the savings bond certainly has an interesting history. It helped finance wars and put kids through college. Judy Garland, President John F. Kennedy, Superman and Bugs Bunny are just a few notable names that helped promote these U.S. securities.
To commemorate the end of an era, the Treasury Department put together an interesting timeline about the savings bond's history.
"As we transition our savings bond program online – a move that will produce significant taxpayer savings – we wanted to step back and remember how savings bonds came to symbolize the events, people and places that shaped our nation through good times and difficult periods over the past 76 years," Rosie Rios, Treasurer of the United States, said in a statement.
Like other safe interest-bearing investments, interest rates for savings bonds are quite paltry these days. The EE Savings bonds currently earn 0.60 percent. Series I (I for inflation) bonds have a zero percent fixed rate and a 3.06 percent rate based on the Consumer Price Index. Rates are set twice a year in May and November.