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Maturity Date

Category — Issue Parameters
By Konstantin Vasilev Member of the Board of Directors of Cbonds, Ph.D. in Economics
Updated September 11, 2023

A maturity date signifies the day when the initial sum of a promissory note, check, acknowledged bond, or any form of debt arrangement reaches its payment deadline. This specified date, typically indicated on the related document, marks the repayment of the original investment to the holder. Simultaneously, any interest disbursements that were periodically provided throughout the duration of the bond come to a halt. The term "maturity date" also applies to the concluding date by which the entire amount of an installment loan must be settled. Meanwhile, time to maturity" pertains to the duration over which the bondholder will continue to receive interest payments on their investment.

Maturity Date

Types of maturity

Maturity dates play a role in categorizing bonds and other securities into three main groups:

  1. Short-term. Bonds that mature within one to three years.

  2. Medium-term. Bonds with a maturity of 10 years or more.

  3. Long-term. These bonds have extended maturity periods, with a notable example being the 30-year Treasury bond. These bonds begin distributing interest payments, usually every six months, from the time of issuance until the full 30-year period elapses. At the point when the initially invested principal is reimbursed to the investor, simultaneously, interest payments cease.

Additionally, the following types are distinguished:

  1. Commercial Papers. Commercial papers are akin to ultra-short-term bonds, maturing in less than a year or under 9 months in the US. Although they can legally have maturities of up to 270 days, most issues mature within 30 days. Some even exist as overnight securities.

  2. Callable Bonds (Bonds with Call Option). In this case, the issuer possesses the right to redeem the bond from the investor after a specified period, enabling earlier repayment.

  3. Bonds with Put Option (Bonds with Right to Demand Early Repayment). Similar to callable bonds, the investor can demand redemption before maturity.

  4. Extendible Bonds. These bonds provide the flexibility to extend their maturity, with both the issuer and investor able to exercise this option. If the investor extends the bond’s term, it resembles put option bonds. If the issuer extends, it’s akin to callable bonds.

  5. Bonds with Two Maturity Dates. These bonds feature dual maturity dates. The issuer must redeem the bonds within a specified period, functioning somewhat like callable bonds.

  6. Perpetual Bonds. These bonds lack par value redemption, granting only coupon income. Despite being associated with a specific date, issuers can redeem them at par value post that date. Due to their typically low-interest rates, redemption is often impractical, allowing them to remain in circulation.

Understanding how maturity dates work for loans and investments

Maturity dates for loans

Loan maturity dates denote the specific day on which it is scheduled to be completely repaid. The aim is for both the principal amount and any accrued interest to be fully settled if you’ve consistently met your payment obligations. If an outstanding balance remains after maturity, collaboration with the lender becomes necessary to determine a repayment plan.

To ascertain your loan’s maturity date, consult your loan agreement for the final payment date. For instance, suppose you take out a $20,000 car loan with a 60-month term on March 4, 2022. The loan matures five years later in this scenario, with the last payment due on March 4, 2027.

When it comes to mortgage loans, the maturity date can stretch several decades into the future, contingent on the loan term. For example, acquiring a $325,000 house with a $25,000 down payment and a 30-year mortgage on March 4, 2022, results in a loan maturity date of March 4, 2052.

Utilizing a mortgage calculator and inputting your loan amount, term, and interest rate can aid in determining the amortization—how much principal and interest you will have paid by the time the loan matures.

One aspect to be mindful of is the potential fee imposed by your lender if you repay your loan before its maturity date. Referred to as a prepayment penalty, this fee compensates for the interest earnings lost by the lender due to early repayment. Reviewing your loan agreement beforehand is important to prepare for this circumstance.

Maturity dates for investments

In investing, the maturity date signifies the day you receive the funds you’ve invested in instruments such as bonds, notes, and certificates of deposit (CDs). Below, we outline how maturity operates in each of these cases.

CD maturity mechanism

With a conventional CD, you invest a specified sum of money with a bank or credit union for a designated period. Upon CD maturity, you gain access to both the initial deposit and the earned interest. As an illustration, placing $15,000 in a two-year CD at an annual percentage yield (APY) of 0.90% results in a maturity amount of $15,271.21.

Following maturity, you can opt to withdraw the funds or initiate another CD term. Occasionally, CDs are automatically renewed if you don’t withdraw within a specified timeframe, underscoring the importance of noting the maturity date. Early withdrawal fees might be levied if you withdraw funds before the maturity date.

Such investments are a secure method to store short-term funds due to their generally fixed and guaranteed interest upon maturity. Additionally, up to $250,000 of funds in an FDIC-insured CD account are safeguarded in the event of bank insolvency.

Bond maturity mechanism

Upon a bond’s maturity, you receive its face value, also known as the "par" value, which corresponds to the principal you lent to the bond issuer. Unlike CDs, bonds may yield interest payments before reaching maturity, typically occurring biannually. For instance, investing $5,000 in a bond would result in a $5,000 return upon maturity and semiannual interest payments that can be pocketed or reinvested. This characteristic makes bonds a favored option for generating regular income.

Certain bonds may mature over the course of decades, with U.S. Treasury bonds, for example, having terms that can extend up to 30 years. U.S. Treasury notes resemble bonds but have shorter maturity periods, often under 10 years. While bonds are generally considered lower-risk investments due to their being fixed-income securities, they aren’t entirely devoid of risk. There’s a possibility that companies may struggle to fulfill interest payments or repay the loan.

To assess credit risk, bonds possess credit ratings that aid in investment comparisons. Although U.S. government bonds are less prone to default risk, company bonds present varying risk levels.

Clarifying maturity dates and their implications

What a maturity date does not imply:

  1. Loan Payoff Timing. Maturity dates do not signify when a loan will be fully repaid. While maturity dates apply to investments like bonds and mutual funds, indicating a specific endpoint, loan repayment is influenced by other variables.

  2. Equivalence to Due or Expiration Dates. Maturity dates should not be confused with due dates or expiration dates. Depending on the security or debt instrument type, maturity dates might pertain to when an investor receives principal and interest payments or when principal repayment takes place.

  3. Termination of Investment Product’s Life Cycle. Maturity dates do not always denote the conclusion of an investment product’s life cycle. Many investments have multiple maturity dates, implying possible renewal after the initial date lapses. This renewal could introduce new rates, terms, and conditions.

  4. Definitive Measure of Investment Viability. Maturity dates do not serve as an absolute indicator of how long an investment can remain viable. The viability of security hinges on its performance within its market sector and its susceptibility to alterations in economic and political environments, which can influence its value and performance over time.

  5. Obligation to Liquidate at Maturity. Maturity dates do not mandate that investors liquidate their holdings upon maturity. Some investors might opt to reinvest their assets in newer versions with differing maturities, contingent on their preferences and the prevailing market conditions at that juncture.


For instance, let’s consider a scenario in April 2021 where business XYZ borrowed $10,000 from a lender and utilized their office building as collateral.

Within the agreement, a specific maturity or due date would be stipulated on the note by which the principal repayment and interest should occur. Failure to meet this deadline could lead to legal proceedings between the involved parties.

This document also outlines the timeframe within which the payment must be made, along with potential additional charges such as late fees, and the repercussions of delayed payment.

Key Details:

Borrower: Business XYZ Interest Rate: 14% annually (subject to change) Repayment Period: 36 months Late Fee: $25 per month (if payment is overdue)

The maturity or due date for the complete repayment of this amount is set six years from now, specifically in April 2027.

Should the payment not be completed by the agreed-upon maturity date, both parties might bear legal responsibilities, potentially resulting in actions such as the seizure of the collateral property (the office building) initially put up to secure the debt repayment. Additionally, measures like wage garnishment could be pursued.

The mentioned example isn’t limited to business XYZ borrowing from an individual; it also applies to corporations and their lenders.


  • What happens if a loan is not paid by the maturity date?

  • What is the difference between the maturity date and the expiration date?

  • How is the maturity date calculated?

  • What is the due date?

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