Once the go-to gift for birthdays and graduations, savings bonds appear to be facing extinction.
U.S. savings bonds are on the endangered list.
They were once a go-to gift for graduations, birthdays and weddings. Now, nearly a century after they were first introduced, U.S. savings bond sales have nosedived.
CNN Money said the sale of savings bonds topped 40 million in 2000. Last year, just 400,000 were sold.
There are two primary reasons that savings bonds are seemingly on the verge of extinction. According to CNN Money:
- Low interest rates. “The interest rates are so low these days that people just don’t even get involved in them anymore,” says Jim Moore, a Wells Fargo financial adviser based in St. Louis. Savings bonds sold near the end of 2013 were generating just 0.1 percent interest. The fixed-rate EE bond is a bit better, yielding 0.5 percent interest for the next 20 years. Bonds aren’t the attractive investment they once were.
- Online sales. If video killed the radio star, the Internet killed savings bond sales. In 2012, the U.S. quit selling paper bonds over the counter. Instead, people were forced to purchase savings bonds online, and the paperwork was cumbersome, CNN Money said. Sales plummeted soon after the paper bonds were phased out.
Do you have a stack of savings bonds Grandma and Grandpa gifted to you? Chances are, the bonds have stopped earning interest, and you can cash them out. According to Investopedia.com:
Series EE bonds, the common variety first issued in 1980, were designed to pay interest for up to 30 years. So any bonds dated 1984 or earlier will have stopped paying by the end of 2014. At that point, their value is frozen, so there is no reason other than nostalgia to hang onto them. Instead, you can cash them in and put the money to more productive use.
The U.S. Treasury Department told Investopedia that billions of dollars in savings bonds have quit earning interest, but have not been redeemed. If you have savings bonds lying around, you can check their value by clicking here.
Do you have savings bonds that you need to cash in? Share your comments below or on our Facebook page.