Homonym: Variable Rate (Interest)
A "Variable Rate" refers to an interest rate that can change over time, typically in relation to a benchmark rate, such as the Federal Reserve rate. This means that the amount of interest you pay on a loan or earn on an investment can fluctuate, affecting your overall payments or returns.
Variable rates are commonly found in financial products like mortgages, credit cards, and savings accounts. While they can offer lower initial rates compared to fixed rates, they also carry the risk of increasing costs if market rates rise, making it important for borrowers and investors to monitor economic conditions.