A fixed interest rate, also known as a fixed rate, is an interest rate that remains constant over a specific period. This means that the interest on a particular amount, such as a loan or a deposit, remains unchanged throughout the specified term. This is in contrast to variable interest rates, which can change over time based on market conditions or other factors.
Fixed interest rates are used in various financial contexts, including fixed-rate loans, fixed-term deposits, and bonds. They provide a degree of security and predictability in terms of interest costs or returns, as they do not fluctuate during the contract's duration. This can be useful for individuals and businesses looking for stable financial planning and budgeting.