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Simple English definitions for legal terms
variable rate
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A quick definition of variable rate:
Variable rate: A variable rate is a type of interest rate that can change over time. This means that the amount of interest you pay on a loan or earn on an investment can go up or down depending on certain factors. For example, if the economy is doing well, interest rates may go up, and if the economy is struggling, interest rates may go down. It's important to understand the terms of a variable rate loan or investment so you can plan accordingly and be prepared for any changes in the interest rate.
A more thorough explanation:
VARIABLE RATE
A variable rate is an interest rate that can change over time. It is not fixed and can go up or down depending on various factors.
One example of a variable rate is a credit card with a variable interest rate. The interest rate on the credit card can change based on the prime rate or other factors. Another example is a variable rate mortgage, where the interest rate can change based on market conditions.
For instance, if the prime rate goes up, the interest rate on a credit card with a variable rate may also go up. Similarly, if the market interest rates go down, the interest rate on a variable rate mortgage may also go down.
Overall, a variable rate can be beneficial if interest rates are low, but it can also be risky if interest rates rise significantly.