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 thousand bucks.
Beginning Jan. 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 buyers, who tend to be older, have been complaining, said John Wagner, a vice president at Wings Financial Credit Union. Wings branches have posted signs noting the elimination of over-the-counter paper savings bonds, and Wagner said they've also seen an increase in sales.
The holiday season has traditionally been the busiest time of year for savings bond purchases, but volume is actually down this year compared with the same time last year, the Federal Reserve said Tuesday.
For a savings tool that has largely been forgotten, the savings bond 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 that can be found on my blog: www.startribune.com/mcguire.
"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.
Kara McGuire • 612-673-7293