Variable Interest Rate

The variable interest rate, also called a floating rate, will go up or down to reflect the changes in the prevailing market rates. When market rates go up, you pay more for servicing your loan if you have a floating rate. At the time of taking credit, variable market rates are usually lower than fixed. However, you should also accept its unpredictability which can make you pay potentially different amounts of interest and hence make budgeting difficult. 

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