More People are Investing in CDs Than Savings Bonds

Recently, SavingsBonds.com has been heavily promoting thesale of CDs. The web page is a family owned business that answers questionsabout savings bonds to save people from the hassle of dealing with the TreasuryDepartment. The shift is a result of bond interest declining. Currently,there is an all time low in the number of searches for the term “savings bonds”indicating that people are not interested in investing in savings bonds.

CDshave been picking up the slack and paying out almost eight times what an EESavings Bond would payout. Because the interest rates on savings bonds are solow, people are choosing to invest their money in CDs. Marc Prosser,Contributor to Forbes Magazine, has suggested two ideas to reinvigorate investmentsfor savings bonds. He suggests that the headline rates on bonds can lead to amuch higher rate of return than the Treasury leads on. Over a 20 year periodthe EE Savings Bonds pays a rate of 3.5% interest. Moreover, I Bonds areexpected to pay up to 2.5% interest over the next few years.

See Marc Prosser, Why Is SavingsBonds.com Selling CDs ?, Forbes, Jun. 1, 2013.