Adjustable Rate
The name itself reveals the essence of the term. An adjustable rate is a rate that varies over time.
When a trader, for example, trades, with leverage in the financial markets the interest rate on the borrowed fund may fluctuate depending on market movements. This rate change is beyond the control of Banks and savings institutions.
Suppose you borrowed $500 at a 5% rate of interest loaned to you by someone. Depending on policy adjustments; this interest rate could rise to 15% or drop to 4% which is something beyond the borrower’s influence.