|
A government bond is basically a loan that the bond-buyer is making to the government when they buy a bond. The maturity term of the bond is the time at which the government agrees to pay back the loan in full. As every person knows, loans are not given without an interest rate; this is an amount paid by the one getting the loan above the actual amount of the loan, like a fee for using someone else's money. Bond interest is paid either as a coupon payment during the life of the loan, or is paid when the loan reaches its maturity.
The U.S. government offers bonds to the public for private investment in order to pay for programs and infrastructure improvement that it doesn't have the money for. The Treasury Department has offered many different varieties of bonds ever since 1916. The bonds have different terms, different interest payments and are bought in different ways.
Sometimes people buy bonds and forget about them, only to rediscover them years later in the back of a drawer. Or, when someone in the family dies, bonds are left as part of an inheritance, but the inheritor doesn't know what the bonds are worth, or if they are still earning interest. The U.S. Department of Treasury's Bureau of Public Affairs had designed a savings bond calculator that is useful for bond-holders to determine what their bonds are worth.
The bond calculator will tell the inquirer whether or not the bond has reached its maturity. Some bonds that have reached their maturity date continue to pay interest for another period of years, but some stop paying interest. If a bond holder discovers that his bond has stopped paying interest, it is better to cash the bond in for its redeemable face value. Because some bonds have not paid out interest, but have kept the interest accrued within the bond, some bonds are worth more than their face value when they are redeemed.
The bond calculator can also tell the bond holder how much interest the bond is still earning if it hasn't matured yet, or has an extended maturity date. Damaged or destroyed bonds can be replaced, and then cashed in, if the owner has a record of them. |
Spend Less Than You Earn
E-Commerce