What Is a Variable Interest Rate, and What Does It Mean for Your Credit Card Debt
Unlike a fixed interest rate, which remains constant, a variable interest rate can change over time. Most credit cards have variable interest rates tied to the U.S. prime rate or a similar benchmark. Here's a complete definition of a variable interest rate, how it affects your credit card debt, and how you could avoid credit card interest altogether.
Simply put, a variable interest rate is an interest rate that can change over time. Variable interest rates are generally tied to an underlying index, such as the U.S. prime rate. A variable APR is a similar concept, although an APR can be slightly higher than an interest rate, as it includes interest and fees directly related to borrowing money.
A variable interest rate can change over time. Image source: Getty Images.
Source: Fool.com
