Canada Savings Bonds were a way for the Government of Canada to borrow money similar to other Government of Canada bonds. The most important Canadian bonds are Canada's 10-year bonds and Canada's 5-year bonds. The difference is that 10-year and 5-year bonds are marketed to financial institutions, while CSBs and CPBs were marketed to all Canadians. They were issued between 1945 and 2017. The Bank of Canada managed the program and offered competitive interest rates to lenders.
If your CSB or CPB is lost, stolen or destroyed, you can report your bond as lost to redeem it. To report a lost CSB or CPB, call 1‑800‑575‑5151 with the following information at hand:
For more information about the process of redeeming lost bonds, please click here.
Sample CSB issued in 1992. Much older CSBs (before 1977) had coupons attached to them. Photo from CSB website.
CSB used to be essential for financing the Canadian government. For example, in 1987, issuance was at $55 billion. As banks grew and became a larger portion of the Canadian financial system, the importance of CSB declined. For example, in 2015, CBS's issuance was just over $6 billion. In the same year, KPMG estimated that the CSB program costs taxpayers $58 million annually.
When the program was introduced, it was much needed as the government needed financing, and Canadians needed a safe investment. In the 2010s, it was very difficult to justify the program's existence as the government could finance itself easier and cheaper by selling bonds to financial institutions. Meanwhile, Canadians had access to a variety of investment and saving options.
Canada Savings Bonds actually came in 3 flavours.
Each of these flavours comes in two sub-flavours, regular interest and compounding interest. Regular interest bonds had coupons that investors would exchange for periodic interest payments. Physical coupons were not attached to bonds in later years. Instead, the interest cheque was mailed to the registered holder, or a direct deposit was made into their account. If you have not received your interest, you need to ensure that the CSB administrator has your correct information on file.
A compound-interest Canada Savings Bond was issued in 1977.
CSB and CPB were purchased in 3 ways.
If you owned Canada RSP (an RSP held with the Canada Savings Bond Program) or Canada RIF (a RIF held with the Canada Savings Bond Program), they no longer earn interest. You must visit your financial institution to transfer your funds into another registered retirement account. Alternatively, you can contact the Canada Savings Bonds program to withdraw your funds. Note that your withdrawal would count as income for income tax calculation.
Compound interest bonds would add each period's interest to the principal for calculating the next period's interest. You will receive all your interest payments when you redeem the bond. To protect interest earned on CSBs and CPBs, they could be bought under a tax shelter like a registered retirement saving plan or a tax-free savings account.
Canada Savings Bonds were a replication of the Victory Bonds. By purchasing these bonds, Canadians were directly lending to the federal government. Thus Canada Saving Bonds were the safest investment available to Canadians. Canadians could buy Canada Savings Bonds through a financial institution. In addition, many employers offered to use a portion of their employees' salaries to buy them savings bonds.
Changes in Canadian interest rates can be observed by considering the issuance interest rate for Canada Savings Bonds.
Some provinces, in turn, imitated the Canada Savings Bond program. There were Ontario Saving Bonds, Quebec Savings Bonds (issued by Épargne Placements Québec) and Saskatchewan Savings Bonds.
Ontario Savings Bonds were issued from 1995 until 2018 and could only be sold to Ontario residents. They included variable interest rate bonds, step-up bonds and fixed rate bonds. Variable rate bonds were 3-year bonds where interest rates would change annually. Step-up bonds were five-year bonds where the interest rate would increase yearly until maturity. Fixed-rate bonds were offered with 3-year, 7-year and 10-year maturities. Fixed-rate bonds could only be redeemed at maturity. Step-up bonds could be redeemed semiannually for two weeks, starting on June 21 and December 21 of each year. Variable rate bonds can be redeemed each year for two weeks beginning June 21.
The purchase of Saskatchewan Savings Bonds was limited to Saskatchewan residents, and their issuance stopped in 2010.
Canada Savings Bonds, Ontario Savings Bonds and Saskatchewan Savings Bonds had their issuance discontinued so that the government could save the money spent on the program. In contrast, Quebec savings bonds are still issued. These are 10-year bonds, with their interest being set each year.
In 2022, Quebec savings bonds are on sale from September 29 until November 1. This is a highly flexible investment because it can be issued at any denomination greater than $100 and redeemed at any time without any penalty. The interest rate in the first year for Quebec savings bonds is currently 3.75%. This product is offered by Épargne Placements Québec, which is an agency of the department of finance of the Quebec government. Épargne Placements Québec also offers other savings products, including step-up bonds, fixed-rate bonds, fixed-rate green bonds, stock index bonds, Flexi-plus savings, periodic savings plan and payroll periodic savings plan.