DEFINITION of 'Continuous Bond '

A continuous bond is a financial guarantee commonly used in international trade that renews automatically until it is canceled. Continuous bonds do not expire as long as the client makes the required payment for each renewal.

BREAKING DOWN 'Continuous Bond '

Continuous bonds are used as customs bonds, airport security bonds, importer security filing bonds, and intellectual property rights bonds. The $50,000 continuous import bond is the most common in the U.S. and requires up to 10 days to be put in place. The continuous import bond is a type of customs bond – a bond that guarantees the U.S. Customs & Border Protection (CBP) that the importer will make good on its payment. If the importer fails to make its payments, the CBP can file a claim against the bond from the surety company that guaranteed payment. In most cases, the amount of the bond must be at least 10% of the total duties and taxes paid to CBP annually at a minimum of $50,000. This means that the duties, taxes, fines, and penalties that the surety company will cover within each 1-year bond term is $50,000.

A continuous bond can be used for an annual period and covers ongoing shipment of imports within that year. There are three parties involved in this bond – the surety company that issues the bond, the principal (importer) who is required to file the bond, and the CBP. The continuous bond is automatically renewed every year if it is not canceled unless it is terminated by one of the three parties involved. This bond is an option for importers who bring goods into the U.S. on a frequent or regular basis. Furthermore, the bond can be used by multiple customs brokers in cases in which an importer uses different trade brokers in different U.S. markets.              

In the United States, any number of insurance or surety companies may sell continuous bonds under standardized terms established by the government. The Revenue Division of the U.S. CBP agency approves continuous bond submissions. Information stated on the bond and rider (if applicable) should include the bond amount, principal name, importer name, importer number, and CBP-assigned number. The bond can be used at any port of entry.

The opposite of a continuous bond is a term bond, single entry bond, or single transaction bond. A single transaction bond covers only one import shipment. This bond covers only the entry or transaction for which it was written and it is filed at the specific port where the entry will be made. A bond that is not continuous may be renewed using a continuation certificate.

  1. Bond ETF

    Bond ETFs are very much like bond mutual funds in that they hold ...
  2. Fixed-Rate Bond

    A fixed-rate bond is a bond that pays the same amount of interest ...
  3. Dollar Price

    Dollar price is a method of pricing a bond in value terms, not ...
  4. Government Bond

    A government bond is a debt security issued by a government to ...
  5. Bond Option

    A bond option is an option contract in which the underlying asset ...
  6. Bond Violation

    A bond violation is a breach of the terms of a surety agreement ...
Related Articles
  1. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  2. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  3. Investing

    How Bonds Are Vital to a Successful Portfolio

    While bonds are a vital part of an investment portfolio, they are often ignored.
  4. Investing

    The Best Bet for Retirement Income: Bonds or Bond Funds?

    Retirees seeking income from their investments typically look into bonds. Here's a look at the types of bonds, bond funds and their pros and cons.
  5. Investing

    Using U.S. Savings Bonds As a Long-term Investment

    A 20-year Series EE savings bond pays more interest than a 20-year Treasury bond. Government-issued long-term bonds might not always be the best choice.
  6. Investing

    U.S. Corporate Bonds: The Last Safe Place to Make Money

    There aren't many other sources right now for relatively safe, steady income.
  7. Investing

    5 Fixed Income Plays After the Fed Rate Increase

    Learn about various ways that you can adjust a fixed income investment portfolio to mitigate the potential negative effect of rising interest rates.
  8. Investing

    Find the Right Bond at the Right Time

    Learn about the types of bonds you should consider investing in, when you should be buying them and how to compare yields against their time to maturity.
  1. What are the risks of investing in a bond?

    Are you thinking of investing in bond market? Learn more about bond market investment risk, including interest rate risk, ... Read Answer >>
Trading Center