Canada Savings Bonds will pay out their lowest rate of interest in at least 20 years, the government said Monday as it set rates for the upcoming year.
Amid record low interest rates that have also driven down rates for products such as for savings accounts and guaranteed investment certificates, the Department of Finance said the government-issued bonds will pay an annual interest rate of 0.4 per cent on its Series 120 offering.
Savings bonds, first offered in 1946, can be redeemed at any time. While the interest rate can't be lowered for the rest of the year, the government can move it higher if "market conditions warrant."
The Canada Premium Bond, which can only be redeemed once a year on the anniversary of its issuance, will pay 1 per cent.
The new interest rates also apply to bond series dating back to 1991.
By comparison, the interest rate on a Royal Bank high-interest savings account is set at 0.75 per cent (but is not guaranteed), and a one-year non-redeemable GIC at Scotia Bank offers a guaranteed 0.20 per cent.