Ultra-low interest rates are not only harming retirees and other investors who need interest income to survive, they have also put U.S. savings bonds on the endangered list.
Sales of the once-popular savings instruments have fallen off a cliff. They shrank to only 400,000 sold in 2013, down sharply from more than 30 million in 2000,
CNN Money reported.
There are several reasons why savings bonds, once a traditional gift for students, newly married couples and anyone having a birthday, are "going the way of the landline telephone," according to CNN.
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"The interest rates are so low these days that people just don't even get involved in them anymore," said Jim Moore, a Wells Fargo financial adviser based in St. Louis.
The fixed-rate "EE" bond offers a tiny 0.5 percent interest rate for the next 20 years, while bonds issued at the end of last year were yielding an even worse 0.1 percent.
Another factor killing off demand is that in 2012, the government stopped sales of over-the-counter paper bonds and forced people to buy them online via Treasury Direct.
"Now you have to go online and fill out cumbersome forms with your taxpayer ID number, the intended recipient's Social Security number, your bank account and other information. It's even more complex if you try to gift a savings bond to someone under 18," CNN noted.
The only way to get a paper U.S. savings bond now is when a taxpayer asks that his or her federal refund be paid to them as savings bonds. The bonds are only issued in $50 increments.
Investopedia said the U.S. Treasury Department estimates that unclaimed money in the form of savings bonds that have stopped earning interest but that have not been redeemed amounts to "billions of dollars."
Series EE Bonds, which were first issued in 1980, paid interest for up to 30 years. So any bonds dated 1984 or earlier will have stopped paying by the end of 2014.
Prior to the Series EE Bonds, Americans bought Series E Savings Bonds. Those were issued from 1941 to 1980, and all of them have stopped earning interest.
The more recent Series I Bonds, which pay a combined fixed and inflation-adjusted rate of interest, were first issued in 1998. The earliest those 30-year instruments will stop gaining value is 2028, Investopedia noted.
SavingsBond.com recommended that Americans cash in their savings bonds rather than run up large credit card bills, because redeeming lower yielding bonds makes more sense than carrying high-interest credit-card balances.
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