A swap that comes with an embedded option whereby a counterparty has the right to activate or deactivate the swap agreement when a specific rate triggers a barrier level (the barrier event). The barrier level can be single or double (range) for which the reference rate used to trigger the swap is not necessarily the one used to determine the payment of a respective leg. The barrier can come into effect only during a specific period of time, or only if the rate remains within a certain range for a given number of observations. It also can be smoothed to provide a softer barrier structure. Examples of barrier swaps include callable swaps, puttable swaps, extendible swaps, etc.

This swap is also known as a trigger swap.