Fixed rate

Fixed rate

A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.

Fixed Interest Rate

An interest rate that does not change over the life of a loan or other form of credit. If one borrows money at a fixed interest rate of 10%, then 10% is calculated over the principal balance each time the interest compounds. A fixed interest rate differs from a variable interest rate, which may change, at least within certain parameters. Most home mortgages in the United States have fixed interest rates. It is also called simply a fixed rate.