What is a variable interest rate?
Variable interest rate: A variable interest rate can change over the life of a loan, usually because it is tied to a benchmark rate. Your payment can rise or fall as the rate changes.
Variable rates are common on HELOCs, credit cards, some student loan refinancing offers and business lines of credit. The loan agreement explains which benchmark is used, how often the rate can change and any caps.
A variable rate may start lower or higher than a fixed rate, but there is no way to know in advance how it will move.
When you compare offers
Check how high the rate and payment could go under the loan's caps, and whether you could afford that payment.
Related guides
- Fixed vs. Variable Rates When Refinancing Student Loans
How fixed and variable rates work on a student loan refinance, the trade-offs of each, and the questions worth asking before you choose — plus what refinancing federal loans gives up.
- How a HELOC's Draw and Repayment Periods Work
What happens during a HELOC's draw period and repayment period, why the payment can change, and the questions worth asking before you open a home equity line of credit.
This glossary is for general educational purposes and isn't financial, legal or insurance advice. Lendara is not a lender and does not make credit decisions. Lendara is a free online marketplace that connects you with participating lenders and providers, who set their own eligibility rules, rates, fees and terms. Lendara may receive compensation from partners, which may affect which offers appear and their order.