A term bond is a series of bonds that are issued by the same borrower and mature on the same date. All the bonds in the issue reach maturity and must be paid off in a lump sum at the same time. The one maturity date is what distinguishes term bonds from serial bonds. A term bond usually carries a sinking fund requirement where the issuer sets aside reserves each year to provide for retirement of bonds. Except for being tax exempt, term bonds are quite similar to standard corporate debt. An example of a term bond is when a company issues $1 million worth of bonds, all maturing 15 years from the date of issue.

A serial bond is a bond (particularly a municipal bond) in which a certain proportion (installment) matures at regular intervals (e.g. each year) until the entire issue is retired. These maturities are known as serial maturities. Each bond certificate in the issue has an indicated redemption date. A typical offering consists of as many as 20 or more different maturities. When borrowers issue serial bonds, different interest rates are attached to bonds maturing at serial maturities. Although serial bonds cannot necessarily be retired at the discretion of the issuer, the issuer may be permitted, on some occasions, to retire the debt at the same time. Serial bonds are distinguished from term bonds in which the bonds in an issue have the same maturity date. For example, a $1 million serial bond issue that calls for paying $250,000 of the principal every five years. This means that the outstanding value of bonds decline over time until the full value is retired.