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.