In Finance, what is a Maturity Date?

John Kinsellagh
John Kinsellagh
Man climbing a rope
Man climbing a rope

Maturity date refers to the date on which an issuer of a credit obligation, or bond, must pay back the principal amount of the debt to those who purchased it. Bonds are debt obligations issued by corporations, sovereign governments, or municipalities. These securities pay a stated annual interest rate for every $1,000 US Dollars (USD) of face amount. The issuer pays bondholders back the full face amount, at a specified date in the future, when the bonds come due or mature. A maturity date is also referred to as a redemption date. Depending on the financial needs of the issuer, maturities can range from one to 30 years.

Debt instruments are frequently categorized in terms of their maturity dates. Bonds with a maturity date of less than one year are called short term, while those that mature between one to five years are called intermediate term, and those maturing in five years or later are considered long term. Fixed income investments that mature in less than one year are often referred to as notes or bills. For most bonds, the specific maturity date is conspicuously noted on the physical face of the bond certificate.

A bond’s maturity date is an important factor in a calculation used frequently by those purchasing bonds in the secondary market. Yield-to-maturity is a figure commonly used in the investment world, which assists investors in determining comparable rates of return on alternate, fixed-income vehicles in the secondary market. Since the price of bonds fluctuates with interest rates, bonds are frequently purchased in the secondary markets at either a discount, or a premium to their face value — or par $1,000 amount.

Bonds are issued in denominations of $1,000 USD. An investor may purchase, in the secondary market, a long term corporate bond with a face amount of $1,000 USD at a discounted price of $870 USD. When this matures, the investor will receive the $1,000 USD. A bond’s yield-to-maturity is a measure of the rate of return, or yield, that accounts for the actual amount paid, the face amount payable at maturity, and the amount of interest received between the purchase and maturity dates.

There is an exception to the general rule that maturity always refers to a specific principal repayment date. For example, some corporations issue bonds that are callable. A bond that is callable gives the issuer the right to redeem it at some point prior to the stated maturity date.

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Discussion Comments


My grandparents bought savings bonds for each of their grandchildren when they were born. Many savings bonds maturity dates are around 17 years from when they were purchased.

This worked out great when you graduated from high school and were ready to go to college. We could cash in the savings bonds and have some extra cash for college expenses.


If you are making house payments, your loan also has a mortgage maturity date. Most mortgage loans are for 30, 20 or 15 years. Usually the shorter the loan, the lower your interest rate is.

Depending on your financial situation, many people like a maturity date that is farther in the future so their payments are lower.

Even though this seems like a long time in the future, many people are comfortable with 30 year mortgage loans. This means that their house will be paid off when your loan reaches the maturity date.

We recently refinanced our mortgage loan for a maturity date of 15 years in the future. This makes it seem like we really will have our house paid off some day.


I believe loans also have maturity dates. I was checking my car loan account online the other day and I noticed it listed the end date of my loan as the "maturity date." (Only another year to go.)

I suppose this makes sense. That is the date by which I'm obligated to pay off the loan.

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