Variable Rate

Variable rate means an interest rate that can change over time. In simple terms, a variable rate can go up or down depending on market conditions or a benchmark rate. Variable rates are important because they can make borrowing costs less predictable. If the rate rises, payments may become more expensive. If the rate falls, payments may become cheaper. For example, if you have a loan with a variable rate and market interest rates rise, your loan payment may increase. A variable rate is not the same as a fixed rate. A fixed rate stays the same for a set period, while a variable rate can change over time.