What is a Maturity Date?
The maturity date is the date on which a debt must be paid in full. On this date, the principal amount of the debt is fully paid, so no further interest expense accrues. The maturity date on some debt instruments can be adjusted to be on an earlier date, at the option of the debt issuer. For example, the issuer of a bond may have the option to buy back the bond earlier than the official maturity date, thereby shortening the period during which it accrues interest.
The principal associated with a debt instrument may be entirely payable as of the maturity date, or it may be payable gradually, over the term of the instrument, depending on the terms associated with the instrument.
Long-term debt instruments are typically considered to have maturity dates 10 years after their issuance dates. Medium-term debt instruments have maturity dates between four and 10 years after their issuance dates, while short-term instruments cover shorter periods. Examples of debt instruments are bonds, loans, and mortgages.
