Fixed APRs vs. Variable APRs

Understanding fixed and variable annual percentage rates for credit cards and other types of loans


When it comes to credit cards and other loans, there’s a term you’re probably familiar with: Annual percentage rate (APR). But do you know the difference between fixed APRs and variable APRs?

If not, read on. Knowing the difference between the two can help you better understand the cost of borrowing money. 

And if you want to learn some APR basics before comparing fixed and variable APRs, you can check out this short video: 

What’s a Fixed APR? 

As the name implies, a fixed APR generally doesn’t change over time. Types of loans that may have a fixed APR include credit cards, auto loans and home loans.

Fixed APRs are based on market conditions at the time you take out the loan—and they stay the same for the life of the loan. That consistency may make it easier for you to set a budget and stick with it. 

Keep in mind that “fixed” doesn’t mean the APR on a fixed-APR loan won’t ever change. With a credit card, for example, a fixed APR might change under certain circumstances—like if you miss a payment. 

But if your credit card’s fixed APR does change, “The issuer generally must notify you before the change occurs, and in most circumstances can apply the higher rate to purchases and other transactions you make after you get the notice,” according to the Consumer Financial Protection Bureau (CFPB).

What’s a Variable APR?

Types of loans that can have a fixed APR—credit cards, auto loans and home loans, for example—can sometimes have a variable APR instead.

A variable APR can change over time. That’s because a variable APR is often based on an index—like the prime rate—that lenders use to set their own rates. A variable APR could change when the prime rate changes.

And when it comes to the term of a loan with a variable APR, consider this from the CFPB: “The longer the term of the loan, the more risky a variable rate loan can be for a borrower because there is more time for rates to increase.”

When Do Variable APRs Change?

How can you find out whether your credit cards and other loans have fixed or variable APRs? And how do you get information on when your APRs might change? 

With credit cards, your cardholder agreement will state how a card’s APR can change over time. On a related note, keep this in mind: If you get a credit card with a special promotional APR, the APR may change when the promotional period ends.

With a home loan, you can look for that information in the documents you signed at closing. You may be able to do the same with an auto loan.

In any case, you may be able to get information about changes to variable APRs by calling your lender or visiting its website.

Reviewing Key Insights on Fixed and Variable APRs

When it comes to fixed APRs and variable APRs, remember:

  • Fixed APRs generally don’t change. 
  • Variable APRs can change.
  • Knowing whether a credit card or loan’s APR is fixed or variable may help you compare your options when you’re shopping for credit.

Now you know more about fixed APRs and variable APRs. And that means you’re armed with useful information that can help you decide which types of credit may work best for you.


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We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

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