Can someone explain this to me? 9 April 2022 at 10:39PM in Debt-free wannabe 4 replies 541 views

CT99099

Hi,

I’m currently trying to become debt-free and have been doing loads of research into it, as well as things like the types of debt. On one of the sites I’ve viewed a few times (I can’t seem to find the URL, otherwise I’d post it here to help you more) they kept on talking about “fixed rate debt”. 

To be honest, I didn’t really understand what it was so I Googled it and only found search results for fixed rate bonds. Are these one in the same or am I missing something? 

From what little I do know about bonds, I don’t think it would make sense in the context I was reading it in, but hey, I might (and probably am) wrong.  

Thanks for any help in advance!

Graham1982

Hello:

I may be wrong but I think fixed rate debt refers to loans etc i.e. the rate stays the same for the lifetime of the product - you get a loan at 5% and you pay 5% interest until the balance is cleared. 

Thanks

Graham

badmemory

I think Graham is correct.  Fixed rate debt & fixed rate bonds are the 2 faces of lending/borrowing money.  One you pay it the other you receive it at a fixed rate.

Vinknut

Most personal/unsecured loans are fixed rate for the duration of the loan.

Most credit cards are variable rate, and the rate will vary along with the Bank of England base rate.

sourcrates

You were probably looking at a site that uses American terms, most unsecured loan borrowing in the UK is at a fixed rate.

Secured loans are usually at a variable rate, so for example the interest rate can go up or down, depending on the markets.

Credit card interest can be at a fixed rate for a period of time also.

Basically secured borrowing is normally at variable rates, whilst unsecured personal loans are at a fixed rate of interest.