You buy corporate bonds through a brokerage account, the same way you buy stocks

To buy a corporate bond, you open a brokerage account with a firm like Fidelity, Charles Schwab, E*TRADE, or your bank's investment division, then search for the bond by its ticker or CUSIP number, and place an order to buy it at the asking price. The bond is held in your account, and you receive interest payments on a set schedule — usually twice a year — until the bond matures or you sell it.

The process is straightforward if you already have a brokerage account. If you don't, you'll need to open one first, which takes about 10 minutes online and requires your Social Security number, address, and bank account information for funding. Once your account is open and funded, buying a bond works like buying any other security.

Key Takeaways

  • You need a brokerage account to buy corporate bonds; your bank, an online broker, or a financial advisor can provide one.
  • Corporate bonds are listed by CUSIP number or ticker symbol, and you can search for them by company name or bond characteristics like maturity date and interest rate.
  • The price you pay depends on current market conditions, not the face value printed on the bond — older bonds may trade above or below their original price.
  • You will owe accrued interest to the seller if you buy between interest payment dates, so the total cost is higher than the quoted price.
  • Interest payments arrive on the bond's scheduled dates, typically twice a year, and you keep the bond until it matures or you decide to sell it.

Opening a brokerage account if you don't have one

Most banks offer brokerage services through their investment or securities division. If your bank doesn't, or if you prefer a dedicated investment firm, you can open an account with Fidelity, Charles Schwab, E*TRADE, TD Ameritrade, or similar brokers. The process is online and takes 10 to 15 minutes. You'll provide your name, address, Social Security number, employment information, and bank account details for deposits and withdrawals.

After you submit the process, the firm verifies your information — usually within one business day — and your account opens. You can then fund it by transferring money from your bank account. Some brokers offer same-day or next-day transfers; others may take three to five business days. Once the money is in your account, you can search for and buy bonds when ready.

Finding the corporate bond you want to buy

Every corporate bond has a unique identifier called a CUSIP number, a nine-character code that distinguishes it from every other bond. You can search for a bond by the company name, the CUSIP number, or the bond's ticker symbol if it has one. Most brokerage platforms have a search tool on their bond trading page where you type in the company name or CUSIP and see all the bonds that company has issued.

When you search, you'll see a list of bonds with their maturity dates, coupon rates (the interest rate), and current asking prices. For example, if Apple has issued multiple bonds, you might see one maturing in 2025 with a 3% coupon and another maturing in 2045 with a 4.5% coupon. The asking price tells you what you'll pay per $100 of face value — a price of 102 means you pay $1,020 for a $1,000 bond. Click on the bond you want, review the details, and place your order.

Understanding bond prices and what you'll actually pay

Corporate bonds trade in the secondary market, meaning their price changes based on supply, demand, and interest rates. A bond's asking price is what sellers want for it right now, quoted as a percentage of the bond's face value. If a bond has a $1,000 face value and the asking price is 101, you pay $1,010. If the asking price is 99, you pay $990. The price has nothing to do with the coupon rate — a bond with a 5% coupon might trade at 102 if interest rates have fallen, or at 98 if interest rates have risen.

When you buy a bond between interest payment dates, you also owe the seller accrued interest — the interest that has built up since the last payment date. If a bond pays interest on January 1 and July 1, and you buy it on April 1, you owe three months of accrued interest on top of the asking price. Your brokerage platform shows this as the "total cost" or "invoice price" when you place the order. This is normal and expected; you'll recoup the accrued interest when you receive the next interest payment.

Placing your order and what happens next

Once you've found the bond and reviewed its price and terms, you enter the quantity you want to buy. Bonds are typically sold in $1,000 increments, so you might buy one bond ($1,000 face value), five bonds ($5,000), or any multiple. Enter the quantity, review the total cost including accrued interest, and submit your order. Most corporate bond orders are filled within one business day, though some less-traded bonds may take longer.

After your order fills, the bond appears in your account holdings. Your brokerage sends you a confirmation statement showing the bond's CUSIP, maturity date, coupon rate, price paid, and accrued interest. The bond is now yours, and you own it until you sell it or it matures. The money for the purchase is deducted from your account balance.

Receiving interest payments and holding the bond to maturity

Corporate bonds pay interest on a fixed schedule, usually twice a year on specific dates called coupon dates. If your bond has a 4% coupon and a $1,000 face value, you receive $40 per year, paid as $20 every six months on the coupon dates. The interest is deposited directly into your brokerage account as cash, and you can leave it there, spend it, or reinvest it in other bonds or securities.

When the bond matures, the issuer repays the face value ($1,000 per bond) to your account on the maturity date. You've now received all the interest payments plus your principal back. If you want to sell the bond before maturity, you can do so on the secondary market at whatever the current price is — which may be higher or lower than what you paid, depending on interest rates and the company's credit quality.

Costs and fees to know about

Most major brokers charge no commission to buy or sell corporate bonds, though some smaller or regional firms may charge a small fee per transaction. The real cost is the bid-ask spread — the difference between what buyers will pay and what sellers want. When you buy, you pay the asking price (the higher price); when you sell, you receive the bid price (the lower price). This spread is typically small for bonds issued by large, stable companies, but wider for bonds from smaller or riskier companies.

Some brokers also charge account maintenance fees or require a minimum balance, though most waive these for accounts above a certain size. Check your broker's fee schedule before opening an account. The interest you receive on bonds is taxable as ordinary income at the federal level, and in most states at the state level too, unless the bond is a municipal bond (which is different from a corporate bond and has different tax treatment).

Frequently Asked Questions

Can I buy corporate bonds directly from the company?

No. Companies issue bonds through investment banks and sell them to the public through brokers. Once issued, bonds trade on the secondary market, and you must buy them through a brokerage account. You cannot buy directly from the company's investor relations department.

What's the minimum amount I need to invest in corporate bonds?

Most corporate bonds have a $1,000 face value, so that's the minimum per bond. However, your brokerage may require a minimum account balance to open an account or to trade bonds. Check with your broker — many have no minimum, while others require $500 to $2,500 to start.

What happens if the company goes bankrupt before the bond matures?

Bondholders are creditors, not owners, so they have a claim on the company's assets before stockholders do. If the company files for bankruptcy, you may recover some or all of your principal, depending on how much the company owes and what assets it has. You won't recover the full amount in most cases, which is why credit rating and the company's financial health matter.

Can I sell a corporate bond before it matures?

Yes. You can sell any corporate bond on the secondary market at any time during market hours. The price you receive depends on current interest rates and the bond's credit quality. If interest rates have fallen since you bought it, you may sell at a profit; if they've risen, you may sell at a loss.

Do I need a financial advisor to buy corporate bonds?

No. You can research and buy bonds on your own through a brokerage account. However, a financial advisor can help you choose bonds that fit your goals and risk tolerance, especially if you're building a larger portfolio. Advisors may charge a fee or earn a commission on the bonds they sell you.