when interest rates are low or near historic lows a loan that comes with a fixed interest rate can become more attractive taking out a loan with adjustable or variable rates probably won t be a good option especially since there s a risk that rates may go up in the future 
a fixed interest rate on a mortgage loan or line of credit makes it easier to calculate the lifetime cost of borrowing because the rate doesn t change this allows you to budget for other expenses including any extras like vacations or a new car it also gives you the opportunity to plan for any savings fixed interest rates tend to be higher than adjustable rates depending on the overall interest rate environment it is highly possible that a loan with a fixed rate may carry a higher interest rate than an adjustable rate loan you ll also want to consider declining rates when it comes to fixed interest rates that s because if interest rates decline you could be locked into a loan with a higher rate whereas a variable rate loan would keep pace with its benchmark rate refinancing is another drawback when you refinance your loan from one fixed rate product to another of the same type or to a variable rate loan you could save money when rates drop but it can be time consuming and closing costs can be high offer predictabilitymore attractive when interest rates are loweasier to calculate long term costs of borrowingmay be higher than adjustable ratesif rates decline you may pay more for your loanrefinancing to a lower rate can be time consuming and expensiveexample of fixed interest ratelet s take a look at a couple of examples to show how fixed interest rates work assume that you re taking out a 30 000 debt consolidation loan to be repaid over 60 months at 5 interest your estimated monthly payment would be 566 and your total interest paid would be 3 968 22 this assumes you don t repay the loan early by increasing your monthly payment amount or making lump sum payments toward the principal here s another example say you get a 300 000 30 year mortgage at 3 5 your monthly payments would be 1 347 and your total mortgage costs with interest included would come to 484 968 