What Were Canada Savings Bonds? (CSB)
Canada Savings Bonds (CSBs) were a financial product issued by the Bank of Canada(BOC) from 1946 through 2017. They offered a competitive rate of interest, with a guaranteed minimum rate. These bonds had both regular and compound interest features and were redeemable at any time.
Introduced as a way to manage national debt, Canada Savings Bonds also provided citizens with a stable, low-risk investment option. These were similar in many ways to U.S. savings bonds offered to American citizens.
Key Takeaways
- Canada Savings Bonds (CSB) were a form of government debt issued to Canadian citizens to help fund federal expenditures.
- CSBs are issued in denominations as small as $100 CAD and have 10 year maturities based on an initial fixed rate for the first year, followed by a variable rate for the following years.
- Originally issued as war bonds to help fund the World War I war effort in 1915 and then again in 1945 to help with WWII, CSBs were discontinued in 2017.
Understanding Canada Savings Bonds
The Canadian government discontinued the sale of Canada Savings Bonds in November 2017,citing declining sales and rising program administrative costs. Government officials said the bond program had gradually become a less critical part of the country’s federal debt management strategy, being replaced by funding programs that offered more financially attractive rates.
CSBswere available in denominations of $100, $300, $500, $1,000, $5,000, and $10,000 with ten-year terms. The interest rate was fixed for the first year and would then switch to a variable rate based on market conditions for the remaining nine years until maturity.
The Canadian government will continue to honor all existing bondsat the time of maturity or redemption, and unmatured bonds will continue to earn interest until they reach the point of maturity. The Canadian treasury can reissue unmatured bonds after they have been lost, stolen or damaged,but will merely redeem any such bonds that have already reached maturity for payment instead of reissuing them.
History of Canada Savings Bonds
The genesis of the Canada Savings Bonds program is similar to that of some war bonds programs in the United States. Canada initially started selling war bonds in 1915 to help finance military efforts by the Allies during World War I. Initially dubbed war bonds, and they would become known as Victory Bonds a few years later. Around the same time, the U.S. began selling Liberty Bonds.
In 1945, the Canadian government began selling securities that were similar to the Victory Bonds but were called Canada Savings Bonds.
Over the past few decades, many Canadiansfirst experienced investments in the form of Canada Savings Bonds. Their predictability and low risk made them a good starting point for inexperienced or cautious investors. As they grew in popularity, the bonds represented a portion of the investment portfolio for many Canadian residents.
However, the Canadian government began to see them as less attractive and not as financially profitable as other funding and debt management options. Starting in the early 2000s,federal officials and advisors in the Canadian government began recommending the program be discontinued. Initially, finance department officials resisted and instead implemented some tweaks to the program, making it more competitive and appealing to investors.
A few years later, though, government studies revealed the escalating costs of the program did not make it fiscally practical. The value of bondsissued was dropping significantly. In March 2017, as part of the release of the federal budget, the government announced the end of the Canada Savings Bonds program, effective later that year.
FAQs
Canada Savings Bonds (CSBs) were a financial product issued by the Bank of Canada (BOC) from 1946 through 2017. They offered a competitive rate of interest, with a guaranteed minimum rate. These bonds had both regular and compound interest features and were redeemable at any time.
What are the two types of Canada Savings Bonds? ›
Types of bonds
Canada Savings Bonds were available in regular interest, which paid the interest directly to the bond holder, and compounding interest, which added to interest to the principal for the purpose of future interest calculations, only paying when the bond was redeemed.
What happened to Canada's savings bond? ›
The sale of Canada Saving Bonds ( CSB ) and Canada Premium Bonds ( CPB ) was cancelled as of November 2017. This decision was released in the federal budget on March 22, 2017. A formal communication was sent out to all Payroll Savings Plan owners and contributors from the Canada Savings Bonds Program.
Can you still cash Canada Savings Bonds? ›
Canada Savings Bonds and Canada Premium Bonds can be redeemed at any time. To complete this request, please Contact us.
What is the meaning of CSB? ›
chemical stimulation of the brain.
What to do with old Canada Savings Bonds? ›
Certificated bonds—which are bonds that were issued with a physical certificate—are redeemable at any time at financial institutions. You can also redeem them via an automated telephone service or the Canada Savings Bonds online service.
What are the disadvantages of a Canada Savings Bond? ›
Cons of bonds
- Low interest rates: Since bonds are safe investment products, the rate of return is lower than other types of investments.
- May not keep up with inflation: Depending on the current interest rate environment, the return you get from bonds may not beat inflation.
Technically the bond is valid for the 12 month “bond term” after the bond becomes effective; however, the bond will not automatically terminate at the end of the bond term. A continuous bond self-renews at the one year mark beginning a new 12 month bond term, unless it is terminated by an authorized party.
How do I know if I have uncashed Canada Savings Bonds? ›
Check for unclaimed balances. Visit the Bank of Canada and search the database of abandoned accounts by entering your name and province. Check your files in case you have some of the $112 million in matured and uncashed Canada Savings Bonds existing in Canada.
Are Canada Savings Bonds a good investment? ›
Government of Canada bonds are considered the highest quality and most secure bonds available. Provincial bonds: These bonds are issued by provincial governments. Provincial bonds aren't as secure as Government of Canada Bonds, but often offer higher rates of return.
⚠️ Canada Savings Bonds phone number 1-877-899-3599 has been discontinued. ✅ 1-833-876-2267 is the only active number. Calling the discontinued number since February 2024 might have exposed you to a scam. If you think you've been affected, call the Canadian Anti-Fraud Centre at 1-888-495-8501.
Is interest on Canada Savings Bonds taxable? ›
You must pay tax every year on the interest income received, whether you buy the bond at face value, at a discount, or at a premium.
What to do with a mature savings bond? ›
If your savings bond from a Series other than EE, I, or HH has finished its interest-earning life, you could cash it and use the money for something else – a project, a financial need, or a new investment like an interest-earning savings bond or other Treasury security.
How do I claim old savings bonds? ›
To file a claim for a savings bond that is lost, stolen, or destroyed, complete a Claim for Lost, Stolen, or Destroyed United States Savings Bonds (FS Form 1048). Please sign the form in the presence of an authorized certifying officer (available at a bank, trust company, or credit union).
How do I cash a security bond? ›
If you have paper savings bonds, you can fill out the appropriate form and mail it and the bonds you want to cash to the Treasury Retail Securities Services — the address is listed on FS Form 1522. Additionally, you may be able to cash your paper savings bonds at your bank or credit union.
What is a US Customs surety bond? ›
The purpose of the bond is to ensure that the importer pays all taxes, fees and duties in a timely manner. If this does not happen, a claim can be made against that bond, so that any or all of those fees can be collected.
