How do interest calculations differ for fixed and variable interest rates?

With fixed interest rates, the interest charged or earned remains constant throughout the loan or investment period. This simplifies calculations as the rate does not change. For variable interest rates, however, the rate fluctuates over time based on market conditions or other factors like the prime lending rate. This makes interest calculations more complex as you need to account for the changing rate at different compounding periods. Typically, amortization schedules are used that recalculate interest amounts as rates change. Variable rates add uncertainty but can be beneficial if rates decrease during the term.