Legal Definitions - maturity date

The maturity date is the specific future date on which a financial obligation, such as a loan, bond, or certificate of deposit, becomes fully due and payable. On this date, the principal amount of the obligation, along with any final interest payments, must be repaid to the lender or investor. It marks the end of the term for which the funds were borrowed or invested.

• Example 1 (Personal Loan): Imagine Maria takes out a personal loan from her bank to finance a home renovation project. The loan agreement specifies a repayment period of seven years. The maturity date for Maria's loan would be exactly seven years from the date she received the funds. On this particular date, her final scheduled payment would be due, and once successfully paid, her loan obligation would be completely fulfilled.

• Example 2 (Government Bond): The U.S. Treasury issues a 30-year bond to raise money for government operations. Investors purchase these bonds, effectively lending money to the government. The maturity date for this bond is 30 years after its initial issuance. On this date, the U.S. Treasury is legally required to repay the original principal amount (face value) of the bond to each bondholder, in addition to any final interest payments that may be due.

• Example 3 (Certificate of Deposit - CD): David decides to invest some of his savings in a 5-year Certificate of Deposit (CD) at his local bank. The CD promises a fixed interest rate for the entire duration. The maturity date for David's CD is five years from the day he opened the account. On this date, the bank will return David's initial principal investment along with all the accumulated interest, at which point he can choose to withdraw the money or reinvest it.