A swap is a long-term commitment. If interest rates fall significantly after you sign, the "value" of your swap becomes negative. If you need to sell your property or refinance your loan, the bank may demand a massive "breakage fee" to cancel the swap. This can effectively trap a borrower in a deal they no longer want. 2. Over-Hedging

In the world of corporate finance, an interest rate swap often looks like a win-win. It’s a tool designed to provide stability, turning the unpredictable waves of floating interest rates into the calm harbor of a fixed payment. But for many, what starts as a "swap" quickly becomes a "trap." The Logic of the Swap

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