APR 5.99% – 35.99%·$100 – $50,000

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Head to head

Fixed vs variable interest rate.

A fixed rate stays the same from the first payment to the last. A variable rate can change with the market, typically tracking the U.S. prime rate plus a margin. Each comes with a predictable trade-off between certainty and potential savings.

Side by side

Fixed rate vs Variable rate

AttributeFixed rateVariable rate
Rate behaviourStays constant for life of loanAdjusts periodically with a benchmark (prime, SOFR)
Monthly paymentSame every monthCan rise or fall over time
Starting rateUsually slightly higher than initial variable rateOften lower at origination
Best in a rising-rate environmentYes, you're insulated from increasesNo, your payment grows
Best in a falling-rate environmentNo, you'd need to refinance to capture the lower rateYes, payment shrinks automatically
Common productsPersonal loans, auto loans, fixed mortgagesHELOCs, credit cards, adjustable-rate mortgages
PredictabilityTotal interest known at signingTotal interest depends on rate path
Verdicts by scenario

Which wins, when.

  1. 01

    Standard personal loan

    Winner: Fixed rate

    Personal loans are almost always fixed. Take the certainty; it's why the product exists.

  2. 02

    Short-term borrowing during stable or falling-rate periods

    Winner: Variable rate

    If repayment is short and you're confident rates won't rise, a lower starting variable rate can win.

  3. 03

    Risk-averse borrower or fixed budget

    Winner: Fixed rate

    Fixed rate matches a fixed monthly budget. No surprise payment increases ever.

  4. 04

    Refinancing flexibility matters more than predictability

    Winner: Variable rate

    Variable rates often have lower prepayment friction, making refinancing easier if rates move.

Common questions

Frequently asked.

Are personal loans usually fixed or variable?+

Fixed. The U.S. personal-loan market is dominated by fixed-rate installment loans. Variable-rate personal loans exist but are uncommon. HELOCs, credit cards, and adjustable-rate mortgages are the main variable-rate consumer products.

What index do variable rates use?+

Most U.S. consumer variable rates track the prime rate or SOFR (Secured Overnight Financing Rate, which replaced LIBOR). The lender adds a margin (e.g., prime + 4%) that depends on the borrower's credit and the product.

How often does a variable rate change?+

Depends on the product. Credit cards reprice monthly with the prime rate. HELOCs typically reprice monthly. Adjustable-rate mortgages adjust on a defined schedule (usually after a fixed intro period of 5, 7, or 10 years, then annually).

Can I switch from variable to fixed?+

Indirectly, by refinancing into a fixed-rate product. Some HELOCs offer a 'fix-the-rate' option that converts a portion of the outstanding balance to a fixed instalment within the same account.

Other comparisons

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