Maturity Date

Updated on April 26, 2024
Article byKhalid Ahmed
Reviewed byDheeraj Vaidya, CFA, FRM

Maturity Date Meaning

Maturity Date refers to a fixed date when the principal amount of loan or loan installment, debt instrument, draft, acceptance bond, or note becomes due for full payment. It acts as a lifespan dictator of security, loan or instrument triggering interest or principal repayment.

Maturity Date Meaning

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Banks and financial institutions use it for their products, such as loans, forward transactions, and interest rates. It is also used in promotional campaigns to attract new customers and retain old ones. In insurance, it represents the completion of the policy when the insured receives the maturity benefits.

Key Takeaways

  • A maturity date is a fixed date that signals the full payment of the principal amount of a loan or debt instrument, determining the lifespan for interest or principal repayment. 
  • It demands the renewal or termination of a financial instrument.
  • It is of three types: short-term, with a three-year maturity period; mid-term, with ten years; and long-term, with a thirty-year maturity period.
  • Maturity date marks payment due for security loans, while the call date is early bond redemption, and the settlement date transfers ownership.

Maturity Date In Finance Explained

The maturity date in finance is the date when the principal amount of a debt instrument becomes due for repayment in full. It also implies that at this date, the lifespan of a financial instrument or transaction ends, necessitating its renewal or else it comes to its natural ending. One can locate it on the financial instrument certificate or agreement during which the investor or the lender would receive the fixed interest rate payments. It proves useful in classifying bonds into three types – short-term, medium-term, and long-term.

Generally, institutions set up maturity dates at the time of loan sanctioning or investment made. For loans, it can range from a few weeks to more than one year, and for securities like certificates of deposit or bonds, it is based on investment type. Moreover, under special situations or needs, the date of maturity for a loan or investment can be extended. On the other hand, for a debt instrument, it becomes vital to know the time of its repayment. 

When an instrument reaches its maturity date, the debt agreement ceases, and investors no longer receive their payments regularly. Callable securities issuers have the choice to pay off the principal balance before the approaching date. All these assist investors in reaching long-term goals like retirement savings. Borrowers can keep track of the timely payments of their loans. All these help investors and borrowers to plan their future taxes, expenses, and repayment of loans safely and also understand monitoring the EE bond maturity date for savings.


The types of securities and bonds fall under one of the three categories mentioned below:

  1. Short-Term: These are those bonds having a maturity period of one to three years.
  2. Medium-Term: Such bonds have a maturity period of ten years.
  3. Long-Term: These bonds have a thirty-year maturity time, like treasury bonds. For every six months, the bond starts pushing the interest payments till the maturity time of thirty years

How To Calculate?

One can depend on a maturity date calculator to know the vital deadlines, like the maturity date of a loan or car loan, to ensure timely repayments. The formula to calculate the same is as follows:

For any security:

First, one should know the term, issue date, and frequency of payment of the instrument. Issue date is the date on which an instrument is sold to the investor. Term is the time in months or years in which the instrument matures. Frequency means how often interest is paid, which can be either monthly, quarterly, semi-annually, or annually. 

The maturity date can be calculated by adding the term with the issue date and then adjusting for the frequency of payments of interest.

Maturity Date = term + issue date + frequency of interest payment.

For calculation of loan maturity date:

  1. Determine the principal amount from the loan agreement
  2. Extract the interest rate from the loan document
  3. Note down the equal monthly installment and payment frequency of the loan
  4. Prepare a spreadsheet to monitor the monthly principal and interest payments depending on the payment amount and loan balance
  5. After every payment, recalculate the monthly interest depending on the updated principal balance after each payment till the balance becomes zero
  6. After the balance reaches zero, note down the number of months or years as its maturity date


Let us understand the topic with the help of a few examples.

Example #1

Suppose an investor buys a bond issued on February 1, 2023. The bond has a term of 10 years, and its coupon payment is semi-annually.

Therefore, the maturity date = term + issue date + frequency of

interest payment

= 10 yrs. + February 1 + six months =

= August 1, 2033

Hence, the bond has a maturity date of August 1, 2033.

Example #2

Northland Power Inc.’s announced to extend the maturity date from November 27 to December 31, 2023, related to a short-term corporate credit facility worth $500 million concerning equity contribution towards HAI Long. The repayment depends on the funds received from the Gentari Sell-Down.

In turn, it is scheduled to be closed in the fourth quarter of 2023 as per the Company’s Management’s Discussion and Analysis held in Q3 2023. It will happen only if certain closure conditions are met, including meeting the requirements within the current multi-party project finance contracts. The agreements also outline that if the sell-down gets delayed owing to excess delayed closing conditions, then the facility might have to be extended or refinanced.

Maturity Date vs Call Date vs Settlement Date

All three form crucial elements of the finance world but have certain differences, as listed below:

Maturity DateCall DateSettlement Date 
The date at which the debt instrument or loan becomes due for payment by the issuer and borrower to investor and lender, respectively.Is the date allowing an investor to redeem a callable bond before its maturity?Is the date at which funds or security ownership gets transferred amongst buyer or seller officially.
Marks the end of receipt of interest payments and receipt of full and final payment.Facilitates before-date principal repayment receipt along with possible call premium.Ownership gets lost or gained related to obligations of the security funds.
Full redemption may get repaid to the investor.Offers higher yield to maturity.For stocks and bonds, it is two working days after the date of execution (T+2)
Had three types: short–, mid-, and long-term dates.Risk of before-time redemption of bonds by its issuerIt refers to the final trade date when the buyer has to pay the payment to the seller.
Has fixed tenure of maturity from 10 to thirty years.Inbuilt uncertainty in yields.No relationship with a maturity date
Used in attracting new customers and promoting financial productsProvides protection during an environment of rising rates.Timing in relation to trade varies.
Traded and issued in all financial markets.It is traded in fixed-income markets.Traded in all financial markets.

Frequently Asked Questions (FAQs)

1. Do preferred stocks have a maturity date?

It is difficult to say for sure that preferred stock always has stated maturity dates, as in many cases, they are missing these. However, they offer fixed dividends, which investors receive at par value when redeeming or liquidating.

2. Do bonds have a maturity date?

Yes, all bonds have a maturity period of at least 30 years. Originally, they had twenty years, which was then followed by ten years of extended maturity. As a result, the bond continues to earn interest for the holder during these years.

3. Do all annuities have a maturity date?

Yes, annuities do have a maturity date, which is more often called an annuitization date. Actually, the annuitization date signals investors to convert their contracts into a source of income. Additionally, different categories of annuities do have different and varied maturity setups. 

4. What does the maturity date mean on life insurance?

In insurance, the maturity date does not strictly mean the traditional maturity date. Rather, an insured receives maturity value upon their passing away from the world or as per the insurance contract. 

This article has been a guide to Maturity Date & its meaning. We explain its examples, how to calculate it, differences with call date, & types. You may also find some useful articles here –

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