Adjustable (rates)

Debt Term

The interest rate on debt is adjustable when it goes higher or lower based on either the general trend in interest rates or some other factor(s) related to the specific details of the debt.

Adjustable Rate Mortgages (ARMs) are common. When interest rates change for similar reasons on credit cards they are called Variable Rate or Variable Interest Rate.

The opposite of adjustable or variable is fixed rate.

Usually an adjustable or variable rate will start off lower than a fixed rate, sometimes as part of a marketing promotion that might be a “teaser rate.” But over time if interest rates go up (as they are starting to as of December 2016) the original fixed rate may be lower than the initial adjustable rate.

Don Gooding

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