investing

How often do Treasury bonds pay interest?

Don TaylorDear Dr. Don,
If I buy a 30-year U.S. Treasury bond, will I receive a monthly check for the interest earnings?

Thanks,
-- Peter Pecuniary

Dear Peter,
U.S. Treasury securities that pay what's called "coupon interest" make those payments semiannually. A 30-year U.S. Treasury bond falls into that category. The most recently issued 30-year bond has a 2.75 percent coupon.

The coupon rate determines the interest payments. The 2.75 percent is the annual coupon. The bond will pay $27.50 per year for every $1,000 in face value that you own. The semiannual coupon payments are half that, or $13.75 per $1,000.

If you have a TreasuryDirect.gov account and use it to buy and hold U.S. Treasury securities, the coupon interest payments will be made directly into your bank account. If you own these securities in a brokerage account, the coupon interest payments are made into your brokerage account. The U.S. Treasury does not issue checks for interest payments.

U.S. Treasury marketable securities -- Treasury bills, Treasury notes and Treasury bonds -- have minimum denominations of $100. If you're buying in $100 denominations, you should plan to hold the investments to maturity, because selling them is both a hassle and expensive. Treasury bills don't pay coupon interest, but Treasury bonds and notes do. Treasury bills are sold at a discount to face value, and the investor receives the face value when the T-bill matures.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Should lucky gambler play the market?

Dear Dr. Don, I recently got lucky at a casino and won $8,000. I have a car loan and carry balances on my credit cards, but I never miss a payment. I don't want to blow all the winnings by paying down unpaid debt for my... Read more

advertisement

Blog

Sheyna Steiner

A year-end pothole for fund investors

Holding actively managed funds in a taxable account can lead to a higher tax bill, thanks to the capital gains distributions being made right about now.  ... Read more

Partner Center
advertisement

Connect with us