A potentiometer is a three-terminal variable resistor, while a rheostat is a two-terminal variable resistor. Electricians usually use rheostats to adjust current and potentiometers to adjust voltage. Potentiometers work as rheostats, but rheostats cannot function as potentiometers.
Potentiometers control a circuit's signal level rather than its power level. Many electronic audio devices feature potentiometers, such as the volume control system on a television. They also serve as position transducers in joysticks and voltage divider circuits. Electricians employ rheostats, on the other hand, for handling much higher voltages and currents. They feature two terminals and a movable wiper that switches from zero to maximum resistance.