how does bond money earn interest
But that's all a bond is -- a loan. When you buy a bond, you're lending money to the organization that issues it. The company, in return, promises to pay interest payments to you for the length of the loan. How much and how often you get paid interest depends on the terms of the bond. The interest rate, also called the coupon, is typically higher with long-term bonds. These interest payments are usually doled out semiannually, but they can also be sent out annually, quarterly or even monthly.