Investor Glossary-variable rateInvestor Glossary-variable rateInvestor Glossary-variable rateInvestor Glossary-variable rateInsightful stock market charts - Click here
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Variable Rate

The HTML to link to this page

A variable rate is an interest rate that may fluctuate over time. To determine its variable rate, a lender first chooses an interest rate such as the prime rate, the 1-, 3-, or 6-month Treasury bill rate, or the fed funds rate as an index to which the variable rate will be tied. Next the lender adds a certain number of percentage points (called a margin, which varies from borrower-to-borrower depending in part on credit standing) on to the index rate, and that sum is the variable rate. Some lenders multiply the index or the index plus the margin by a set number to generate the variable rate. Opposite to a fixed rate, a variable rate should be lower initially than a fixed rate because of the interest-rate risk inherent in a variable rate (the risk is that a variable rate can increase). Examples of loans that typically carry a variable rate include credit cards, adjustable rate mortgages, and home equity lines of credit.

Rate this variable rate definition...

Learn about investing with the Investor Glossary Term of the Day

Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.

Popular Terms: option premium, command economy, retained earnings, deferred revenue, risk management, 401a, dividends payable, 1031 exchange, Zero Cost Collar, annual return, covered put, per diem, 144a, APR, liquidity ratio, FTSE, current ratio, average price per share, reverse mortgage, real GDP, limit order, stock market close, stock split, wholly-owned subsidiary, deferred tax, in escrow, labor relations, required rate of return, debt service coverage, FICO score, implied volatility, EBITDA, quality assurance, cancelled check, minority interest, margin rate, balance sheet, ex-dividend, class C shares, irrevocable trust, open position, 1035 exchange, phantom income, ex-dividend date, inflation, diluted share, VIX, Key Rate Duration, LIBOR

Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use