U.S. Prime Rate
a.k.a. Prime rate, Prime
The interest rate US banks charge their most creditworthy customers, which moves in step with the Fed's…
In plain English
The interest rate US banks charge their most creditworthy customers, which moves in step with the Fed's policy rate.
The U.S. prime rate is the base rate banks use for their best borrowers, and the starting point for many credit cards, home-equity lines and business loans. By long convention it sits about three percentage points above the top of the federal funds rate target range.
So when the Fed hikes or cuts, prime usually moves by the same amount the same day, and borrowing costs for millions of people change with it.
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