Accrual Bond

Accrual Bond Meaning:
A type of bond with a clearly stated interest rate. Accrual bonds are issued for a certain face value, pay nothing until maturity, and at maturity pay the bearer face value plus the interest accrued.

Accrual Bond Example:
Because accrual bonds don’t pay periodically, and if cashed in early don’t pay any interest, they are regarded as a good way of ‘locking money away’ with an inbuilt incentive not to touch it until the maturity date.