Fewer people are banking on savings bonds.
The traditional gift to newborns, children at their confirmations, Bar Mitzvahs and high school graduations or to couples on their wedding day have lost popularity in recent years as interest rates have declined to historically low levels and other investments have become more available.
But their purpose, a safe, guaranteed savings plan, remains intact and should still be viewed as a viable gift or investment, said some financial experts.
‚??It‚??s still an important way to teach children about savings,‚?Ě said Tim Kearney, a professor of business and finance at Misericordia University in Dallas Township. But times change and so do traditions, and this one is a victim of 21st-century finances.
‚??I think it‚??s a shame,‚?Ě Kearney said. ‚??The savings bond was more of a way of connecting with savings. Now there‚??s a connection with spending.‚?Ě
PNC Retail Banking Regional Manager Diana Scavone, who works at the bank‚??s Hazleton branch and serves customers in Luzerne, Columbia and Monroe counties, said the decline in savings bond popularity began about 20 years ago.
She said two decades ago at this time of year bank tellers would be inundated with savings bond purchases. But those requests dwindled over the years to the point the Treasury halted the sale of savings bonds in banks at the beginning of this year. Bonds must now be purchased online at www.treasurydirect.gov.
‚??It was always a big thing around the holidays, but it‚??s diminished over time,‚?Ě Scavone said.
Those currently holding paper savings bonds can continue to redeem them at financial institutions, but any savings bond purchased this year or in the future will remain in electronic form only. No paper copy will be made for bearers or recipients.
Even without that piece of paper, Scavone sees benefits in buying savings bonds.
‚??It‚??s a safe investment. It‚??s reliable. It‚??s guaranteed and it‚??s low risk,‚?Ě Scavone, of Mountain Top, said. But she also understands why they‚??ve fallen out of favor.
Other investment options such as IRAs, 529 college saving plans and workplace retirement accounts have relegated savings bonds to the background. It also didn‚??t help that the ability to buy a bond for half its face value, watch it mature and continue to earn interest has been lost. Now bonds are sold at face value and the interest rate is much lower than in the past.
Just 10 years ago, I Bonds had a 5.92 percent interest rate while Series EE paid 4.5 percent.
Last month, the Bureau of the Public Debt announced interest rates for Series I Savings Bonds and Series EE Savings Bonds issued this month through next April of 1.76 percent and 0.2 percent respectively.
While the rates are low, they‚??re still interest bearing and there are no fees like the ones some banks charge on savings accounts or financial advisors charge for portfolio management. Kearney said that for those reasons small-scale investors see savings bonds as an attractive option, still.
‚??Whether it‚??s to save for a child‚??s college education or for a young couple‚??s first home, U.S. Savings Bonds are excellent gifts to help people achieve a financial milestone,‚?Ě said Jerry Kelly, national director of the Treasury Department‚??s Ready.Save.Grow. campaign.
While the premise remains valid, Scavone said that unless interest rates rise significantly she doesn‚??t see sales of bonds returning to what they once were.
‚??The industry‚??s grown and evolved,‚?Ě Scavone said. ‚??You just don‚??t see the demand for savings bonds we saw before. We didn‚??t have gift cards back then.‚?Ě