A smart investor must know to time her entry into traded tax-free bonds. She should buy these bonds closer to the interest-payment day, and on a very particular date. There is the record date and the ex-date. Usually, the record date comes 15 days before the interest payment date and the ex-date, a day before the record date. To be eligible for the interest payment, your name must appear in the company's books as a bondholder on the record date. But, the price of the bond drops on the ex-date, to the extent of the coupon payment. So, buy the bond at least a day prior to the ex-date.