Canada Savings Bonds Explained

Savings bonds are a popular choice to go with for those who want to gift someone with a financial gain that grows with time. For decades this used to be one of the easiest ways to grow some of your cash and cash out later when it matures. However, since 2017; savings bonds have really died down.

Whether you’re someone who held onto one of these pieces of paper you got under the Christmas tree, or you thought that this was a sound investment at the time; you’re wondering what you can do with them now?

Find out even more about these Canada Savings Bonds, what they are, why they are now gone, and how you might be able to cash yours in if you’re still holding onto them.

The Origins of the CSB

The Canadian Savings Bonds date back to World War I when the government needed to borrow money from the citizens. They offered them the bond in exchange for the money up front and the person would get money back later down the road with interest.

They were once called ‘Victory Bonds’ because they aided allies during the wartime. They fizzled out after the first World War, and then quickly came back around the second World War to help aid in that fight.

They wanted to aid in post war affairs and get everything back on track; so these savings bonds kept being offered for the government to use to rebuild. Since these CSB’s were backed by the Canadian Government, they were one of the safest investments for anyone to make. They continued to be a lucrative way to make money on your money and help the economy and government out.

Specifics of the Canadian Savings Bond

When first offered, you could choose between putting in $100 towards a Savings Bond, or as high as $10,000 towards one. These numbers fluctuated but provided the security of an investment that someone would want given the interest on the bonds.

Speaking of interest, there were two different ways that a person could get interest back from the CSB:

  • Receiving regular interest in payments 
  • Receiving compound interest, interest building on interest, but get this at the end in one lump sum, rather than over time

You had the ability to cash these in at any time, but if you held onto them for 10 years, they would continue to grow interest.

These bonds were physical, and you could see the maturity date, how much the bond was for, interest rate, and extra information printed right on the front of the paper. Even if you forgot how much the CSB was for, the front of the bond would tell you.

When they originally were introduced to the market, 2-4% interest was more likely. They continued to climb and got as far as 19.5% in the early 80’s. They then dipped to as low as 0.5% in the years thereafter. They then declined in popularity and were overall done away with in the recent years.

Why Have They Been Stopped?

Canadian Savings Bonds were stopped because of the rates falling well below where anyone would want to make an investment into. Guaranteed Investment Certificates throughout the country became more popular with higher interest rates and still guaranteed and backed by the Canadian Government.

The end of the program was said to be beneficial for the government because it was costing the government close to $650 million over a nine-year period. The government decided that in order to save more money, they would do away with the savings bonds that were costing this amount of money.

Cashing Your Savings Bond In

Even though the Canadian Savings Bond is not being offered in financial institutions anymore, you can still cash in on the savings bonds that you do have from the past. If you have a CSB that has been matured for some time, then now is the time to bring it in. Holding onto it is not going to keep giving you any interest payments, as it stops after 10 years.

You want to bring the physical paper with you to the financial institution. This is how they know how much you make back, and other specifics, as it is printed on the front of the CSB.

The last of these bonds that were handed out before being stopped matured in 2021, and this means that some might have mature bonds to cash in now before the year is over.

If you have a savings bond, then now is the time to cash in on the extras that you can get from it. Even though they are not offering these savings bonds anymore, you can still use the ones you have, so don’t forget about them!

Frequently Asked Questions About Canada Savings Bonds

Are there other options for growing your investment?

There are many other options that you can make use of to grow your investment. There are both higher interest rate options, and those that are backed by the government. Some of these options are like savings bonds because they provide the backing from the government and a decent amount of interest.

Will any bank cash in my savings bonds?

Yes. Any banking institution is able to cash the savings bond that you still have. You can bring it into your bank, even if they are not the issuing bank to get the cash from them.

Will I still get the interest that was collected on it even though these CSB are no longer being offered?

Yes. You will get the full amount back, plus the specific interest that is listed on the front of the savings bond. They will provide you with the entire amount, take the paper bond from you, and then close it out.

What if I am years away from when the bond matured?

If it has been years since the bond matured, that is perfectly fine. Even if it has been ten years since it has matured, the financial institution will give you the money you’re owed from it – even though the interest stopped accruing years ago.

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Smarter Loans Staff

The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star in 2019.