Nearly every adult over the age of 40 recalls receiving U.S. savings bonds from their grandparents when they were younger.
That is probably a foreign concept for children of today. Why?
In today’s issue of the Fillmore County Journal, you’ll notice several pages dedicated to the “Cute Kids of Fillmore County.” This is a special feature we have been publishing in our newspaper for quite a few years thanks to the participation of readers and support of advertisers. Everyone loves this feature!
Back when we launched this special feature, we promoted the fact that we would be presenting three prizes via a drawing. First place would receive a $100 U.S. savings bond, second place would receive a $50 U.S. savings bond, and third place would receive a $25 U.S. savings bond.
After our winners were drawn, I went through the usual process of gathering information from the parents, such as date of birth and social security number. When I went to one of our local banks, I discovered that banks no longer issue U.S. savings bonds. I was told you have to order U.S. savings bonds online now.
In a June 14, 2014, CNN Money article titled “The death of U.S. savings bonds,” it was reported that “Americans bought over 40 million of the most popular savings bonds in 2000.” In 2013, the U.S. sold a mere 400,000 of them.
The sale of U.S. savings bonds dropped by 99% over a 13-year period. How could this happen?
One might think that better investment options killed the U.S. savings bond, “but it’s the Internet that really killed off demand for savings bonds. You can no longer buy a paper savings bond.” On January 1, 2012, the government stopped sales of over-the-counter paper bonds and forced people to buy them direct online via the U.S. Treasury Department’s portal site.
According to the CNN Money article, “That’s when the big plummet occurred. The goal was to save money, but in the process, the government made it harder for potential buyers. Many older Americans were raised on ads to be patriotic and buy these bonds to help the country (and yourself). There were slogans such as “Back Your Future.” The savings bonds were sold in many places, including local banks and brokerages.”
So, there you have it. That’s what killed the U.S. savings bond.
In an effort to save money, our government made the process for purchasing U.S. savings bonds more cumbersome for the consumer. I suppose our government is saving a lot of administrative costs by spending 99% less time issuing 99% fewer U.S. savings bonds, as well. But, that doesn’t sound like a good business plan if you ask me.
Essentially, this move by our government to save money on the issuance of U.S. savings bonds made them out of sight and therefore out of mind.
And, this is why our top three drawing winners for “Cute Kids of Fillmore County” receive gift certificates from local businesses instead of U.S. savings bonds. In the end, it all worked out for the better, considering we spend $175 with local businesses in Fillmore County instead of investing those dollars in U.S. savings bonds.
But, the story of the death of the U.S. savings bond is very revealing.