When you buy a regular coupon bond, you are entitled to a coupon, which is typically paid at regular intervals, and the face value of the bond (the amount you initially invested), which is typically paid upon maturity. Most coupons are paid on a semi-annual basis, but some may be paid monthly or annually.

Like stocks, bonds can be in street or bearer form, and the payment of your coupon depends on how your bond is registered. If the bond is registered in street form, the company that issued the bond will transfer the coupon payment to your broker, who will then shift the coupon payment to your account. If the bond is registered in bearer form, there are two possible ways for you to receive your money: If you are the owner of record, as documented in the bond issuer's records, the issuer will send you the coupon payments directly. If the bond has no owner of record and is freely transferable, then you will have to clip the coupon attached to the bond and send it to the bond issuer to receive the payment.

If you don't want to be receiving checks in the mail, there are two things you can do. First, you can transfer the bond to your brokerage account and have your brokerage deal with the coupon payments. When you transfer the bond, it will be taken out of bearer form, and the payments will be made in the way they are for street form bonds. Second, some companies that issue many different bonds provide the direct deposit of coupons into bank accounts. You can try to contact the company that issued your bond and find out if it provides this service.

To learn more about bonds, check out our Bond Basics and Advanced Bond Concepts.

  1. Why do bond coupon rates vary so greatly?

    Learn about the two major reasons that cause bond coupon rates to vary so dramatically and what role coupons play in the ... Read Answer >>
  2. How do debit spreads impact the trading of options?

    Find out what it means when a bond has a coupon rate of zero and how a bond's coupon rate and par value affect its selling ... Read Answer >>
  3. What is the most common solvency ratios used in fundamental analysis?

    Learn about the difference between a bond's coupon rate and its yield rate, how the coupon rate influences market price and ... Read Answer >>
  4. When is a bond's coupon rate and yield to maturity the same?

    Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the components of bonds and how they ... Read Answer >>
Related Articles
  1. Investing

    Comparing Yield To Maturity And The Coupon Rate

    Investors base investing decisions and strategies on yield to maturity more so than coupon rates.
  2. Financial Advisor

    Present Value Of Different Bond Types Using Excel

    To determine the value of a bond today - for a fixed principal (par value) to be repaid in the future - we can use an Excel spreadsheet.
  3. Personal Finance

    Coupon Shopping: Clip Your Way To Savings

    Use coupons strategically to score big savings on everyday purchases.
  4. Investing

    Understanding Bond Prices and Yields

    Understanding this relationship can help an investor in any market.
  5. Investing

    Bond Portfolios Made Easy

    Bonds have typically been viewed as stocks' less-glamorous sidekick, but they deserve a little more respect from investors.
  6. Personal Finance

    6 Tricks To Make Coupons Work For You

    Use these strategies to counteract the stores' and manufacturers' coupon tactics and come out ahead.
  7. Investing

    The Pros & Cons Of Using Coupons For Your Business

    Coupons can drive business to your store – you just need to make sure it's profitable business. Here are strategies that work.
  8. Personal Finance

    6 Sneaky Ways Coupons Make You Spend More

    If you're hoping to save money by using coupons, watch out for sellers' strategies.
  1. Coupon Rate

    Coupon rate is the yield paid by a fixed income security, which ...
  2. Coupon

    A coupon is the annual interest rate paid on a bond, expressed ...
  3. Current Coupon Bond

    A bond with a coupon rate that is within 0.5\% of the current ...
  4. Bond Valuation

    Bond valuation is a technique for determining the theoretical ...
  5. Income Bond

    An income bond is a type of debt security in which only the face ...
  6. Registered Bond

    A registered bond is a bond which has its owner registered with ...
Hot Definitions
  1. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  2. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  3. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  4. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  5. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  6. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
Trading Center