Why is SavingsBonds.com Selling CDs?

savings bondsSavingsBonds.com is a family owned business which offers a valuable service to its clients. If you have a question about savings bonds, they can provide you the answer. Many people find dealing with the Treasury department, the government entity which issues saving bonds, a frustrating experience. Instead, many savings bond owners prefer paying a small monthly fee to SavingsBonds.com to have easy to understand answers and help only a phone call away.

SavingBonds.com Is Heavily Promoting CDs

However, SavingsBonds.com appears to have shifted its focus towards making money from marketing CDs. I recently received an e-mail from them letting me know that they now offer CD rates and information on their site. When, I visit the homepage of SavingBonds.com, I see ads for CD products and links to articles about CD Rates.

Interest In Savings Bonds Has Declined By Almost 80% Over The Last 10 Years

The chart below tracks changes in the number of searches for the term savings bonds since 2004. The number 100 represents the peak level of interest. As you can see, the peak interest in savings bonds occurs in the earliest part of the chart. From 2004 through 2009, there is a steady decline in interest in saving bonds. There is a slight pickup in interest in late 2012 (ironically because the Treasury  ended selling paper savings bonds) and then the decline has continued. Right now, there is all-time low in the number of searches for saving bonds.

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Interest In Savings Bonds Follows The Interest On Saving Bonds

Newly purchased EE Savings bonds have been paying an annual interest rate of only 0.2% for the last seven months and at minimum will continue to pay 0.2% through at least November 1st, 2012. Rates for savings bonds are set every six months on the first business day of May and November.  The current interest rate is an all-time low. People are not interested in savings bonds because their rates are so low.

Top Paying CDs Are Offering Interest rates That Are 8 Times As High As EE Savings Bonds

CDs and Saving Bonds have much in common. Both products are extremely safe, accumulate interest, and require the investor to lock-up their money for a period of time. There are some differences like savings bonds have tax advantages but, overall one can say that a person that would be interested in savings bonds would also be interested in CDs.

The rates on top paying CDs have not been pushed down nearly as low as EE savings bonds. When comparing savings bonds to CDs, I like to use the EE series saving bond and the top paying 5 year CD from Learn Bond’s CD Rate table.

  • Interest Rate On New EE Series Savings Bond 0.2%
  • Interest Rate On 5 Year CD Being Offered By Barclays 1.73%

The difference is an incredible 1.53% in favor of CDs. No wonder SavingBonds.com is having trouble with savings bonds.

With saving bonds rates so low compared to a very similar much higher yielding alternative (CDs), its hard to get people excited about investing in them. As a result SavingsBonds.com has turned to a higher rate product to engage the interest of their audience. However, I would like to suggest two ideas to SavingBonds.com to re-engerize interest in investing in Saving Bonds.

The Headline Rates On Savings Bonds Are Misleading, Investors Can Expect To Receive A Much Higher Rate Of Return Than Advertised By The Treasury Department

Full Disclosure: Learn Bonds and SavingsBonds.com have cooperated in the past on an initiative to “Bring Back Paper Savings Bonds”. However, no commercial relationship exists between the two companies.


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