Accrued discount

Accrued discount

Interest that accumulates on savings bonds from the date of purchase until the date of redemption or final maturity, whichever comes first. Series A, B, C, D, E, EE, F, I, and J are discount or accrual bonds, meaning principal and interest are paid when the bonds are redeemed. Series G, H, HH, and K are income bonds, and the semiannual interest paid to their holders is not included in accrued discount.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Accrued Discount

The interest paid on a savings bond at redemption or maturity. Some savings bonds do not have coupons; their accrued discounts are paid in a single sum at redemption or maturity. That is, when the bond matures or is redeemed, the bondholder receives payment all at once, but receives nothing during the life of the bond. Other savings bonds do have coupons paid in semi-annual tranches; for these bonds, the accrued discount includes the amount in all these tranches plus the money, whether par or below par, received at redemption or maturity. See also: Accrued bond, Income bond.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved