Surprisingly, you'd be wrong. The plans were created to be tax-advantaged: the investment returns aren't taxed, and in-state residents often get additional benefits by opting for a plan offered in their home state.

Yet according to the General Accounting Office, less than 3% of Americans take advantage of 529s, and the ones who do tend to be on the wealthy end of the economic spectrum. Perhaps it's due to limited investment options, or high fees in some cases; or the fact that the assets can't be readily liquidated for emergencies like in other types of investments plans.

Still, with some careful shopping around, a 529 may be a much better option than a savings account or hiding your savings under a mattress.
Read the full article from Bloomberg.