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TeachMeFinance.com - explain interest rate swap interest rate swap -- a contractual agreement whereby two parties exchange interest payments on a notional amount of principal during a predetermined period. In a fixed/floating swap, fixed-rate interest rate payments are exchanged for variable-rate payments. In a floating/floating swap, payments tied to two types of short-term variable indices are exchanged. Interest rate swaps are an asset/liability management tool. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.