A hardware-based rate control engine is designed to allow credits to be accumulated over multiple time-slices up to a maximum credit limit. The rate control engine is also allowed to dispatch packets up to a maximum drain rate during each time-slice as long as sufficient credits are available. Allowing credits to accumulate over multiple time slices allows unused bandwidth to be saved during times of little or no traffic and used when the subsequent traffic bursts arrive. Additionally, limiting the maximum drain rate puts a cap on how fast the saved bandwidth can be consumed by subsequent traffic bursts. The rate control settings can be adapted in response to a characteristic, or characteristics, of the traffic flow. For example, one group of settings of a traffic flow can be used for bursty traffic, while a different group of settings can be used for smooth traffic.