what is a floating interest rate 
a floating interest rate is an interest rate that changes periodically the rate of interest moves up and down or floats reflecting economic or financial market conditions often it moves in tandem with a particular index or benchmark or with general market conditions a floating interest rate can also be referred to as an adjustable or variable interest rate because it can vary over the term of a debt obligation understanding floating interest ratesa floating interest rate rises or falls with the rest of the market or along with a benchmark interest rate the underlying benchmark interest rate or index depends on the type of loan or security but it is often either the london interbank offered rate libor the federal funds rate or the prime rate the interest rate financial institutions charge their most creditworthy corporate customers 1