Consumer Comeback Blog

Credit Score Glossary: Variable Interest Rate

Variable Interest Rate: Also referred to as an adjustable rate, is an annual percentage rate that fluctuates over time.

Variable interest rates can be applicable to several different kinds of debt: loans, bonds, credit cards, or mortgages. The variation of the rate is based on a benchmark interest rate or index that changes periodically. An advantage of a variable rate for a borrower is if the index declines, so does the borrower’s interest payments. However, on that same token, interest payments will go up if the index rises.