Whether fixed or variable, whether for loans, savings or investments, they are everywhere!
The fixed interest rate is, as its name suggests, always constant. In other words, you always pay,
or receive, the same amount, regardless of the duration. They are therefore always predictable
and safe, and this makes it easier to monitor your budget. On the other hand, they are generally
higher than variable rates and, if by chance market interest rates drop, no drop for you.
Variable interest rates change according to the market, and are generally indexed to a reference
rate, for example that of the central bank. They are often lower than fixed rates, saving you
money at the start. So if those interest rates go down, your payments will go down, but so will
your interest earnings if you have any.
They are uncertain, this is the main problem, which can lead to an increase in your monthly
payments, but also to an interest gain. This doesn’t make it easier to manage your budget.
So how to choose? If you don’t like risk, choose the fixed rate, of course. But if you are a fan of
strong emotions, and you are ready to take risks to earn more, choose the variable rate.
You have been given the information, the choice remains in your hands.
