PERSONAL FINANCE BASICS
Do Savings Bonds Still Exist?
(And the reason why you may want to buy some)
Years ago, savings bonds seemed a common gift from grandparents to their grandchildren. The bonds were either as a gift when they were born, a subsequent birthday, or even as part of a graduation present.
As late as 2002, I remember walking into a local bank to cash a paycheck and seeing a sign that read “Savings Bonds SOLD HERE.”
Today, those signs are gone.
What happened to savings bonds? Can you still buy them? And more importantly, why should anyone still buy them?
What is a Savings Bond?
Simply put, a savings bond is a loan to the government, just like a certificate of deposit (CD) is a loan to the bank. I know that might sounds strange to explain it that way, but its true.
In both cases, you (the investor) are giving your money to either the U.S. government or a bank, and in return, they promise to give you the money back with some interest.
The big difference is that savings bonds are backed by the “full faith” of the U.S. Government, while CDs are backed by a bank. Sure, the bank is likely insured by the government through the Federal Deposit Insurance…
