When you apply for a personal loan or credit card, the lender may give you a choice between a fixed rate vs. variable rate. Each of these options comes with pros and cons, and your selection can impact how much interest you’ll pay over the life of your
The benefit of a fixed rate mortgage over a variable mortgage is that you will have a defined period of time where your monthly payments would not change. This predictability makes planning finances and budgeting easier. A fixed rate will be slightly higher than the variable rate, as you are ...
When it comes to the term of a loan with a variable interest rate, consider this from the Consumer Financial Protection Bureau: “The longer the term of the loan, the more risky a variable rate loan can be for a borrower because there is more time for rates to increase.” How often do...
Although you'll typically get a lower interest rate with a variable-rate savings account, you're free to deposit and withdraw money whenever you wish without any penalty. Pros of variable interest rates If interest rates increase, a savings account with a variable rate allows you to enjoy a ...
Mortgages aren’t one-size-fits-all. Here’s what you need to know about fixed vs. variable rate mortgages, so you can pick the one that’s right for you.
Variable rate APRs can be more cost-effective, but costs can increase when interest rate benchmarks move up. When it comes to credit – whether in the form of a loan or a credit card – there’s a key term to familiarize yourself with: the annual percentage rate, or APR. There are ...
Flexibility: Your rate and interest earnings can increase if market interest rates rise Potential for lower rates: If market interest rates decline, your variable rate can decrease, reducing your interest expense Considerations: Unpredictability: Variable rates can change without notice, making it challen...
A fixed interest rate can be very beneficial for people who need the stability of a fixed price. For those who are happy to risk paying more on the chance that they may also end up paying less, a variable rate may be more suitable. Interest rates are one of the major factors to ...
A popular type of variable rate loan is a 5/1 adjustable-rate mortgage (ARM), which maintains a fixed interest rate for the first five years of the loan and then adjusts the interest rate after the five years are up. Variable Interest Rate Loans Avariable interest rateloan is a loan in...
A fixed interest rate remains the same for a loan's entire term, making long-term budgeting easier. Some loans combine fixed and variable rates.