prime rate

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Related to prime rate: prime interest rate

Prime rate

The interest rate at which banks lend to their best (prime) customers. More often than not, a bank's most creditworthy customers borrow at rates below the prime rate.

Prime Rate

The best available interest rate under most circumstances. In general, only the most creditworthy customers receive the prime rate, but this is not always true. In any case, a prime rate serves as a benchmark against which other interest rates are compared.

prime rate

A short-term interest rate quoted by a commercial bank as an indication of the rate being charged on loans to its best commercial customers. Even though banks frequently charge more and sometimes less than the quoted prime rate, it is a benchmark against which other rates are measured and often keyed. For various reasons, a rising prime rate is generally considered detrimental to security prices. Also called prime.

Prime rate.

The prime rate is a benchmark for interest rates on business and consumer loans.

For example, a bank may charge you the prime rate plus two percentage points on a car loan or home equity loan.

The prime rate is determined by the federal funds rate, which is the rate banks charge each other to borrow money overnight. If banks must pay more to borrow, they raise the prime rate. If their cost drops, they drop the prime rate. The difference between the two rates is three percentage points, with the prime rate always the higher number.

The federal funds rate itself is determined by supply and demand, prompted by the actions of the Open Market Committee of the Federal Reserve to increase or decrease the money supply.

prime rate

the INTEREST RATE charged by COMMERCIAL BANKS for short-term LOANS to their most preferential customers. The prime rate is somewhat lower than other commercial borrowing rates but applies only to what may be called ‘blue-chip’ companies, generally large companies with the highest credit ratings. See BANK LOAN, BASE RATE.

prime rate

Traditionally defined as the rate of interest charged by a financial institution to its best customers. In reality, many commercial loans are quoted in terms of “prime minus one quarter,”for example, which indicates there are better rates than prime. In addition, many lenders offer rates based on the London Interbank Offered Rate (LIBOR), resulting in interest rates less than prime. Today,prime rate is often just a published rate by a financial institution,called its prime rate whether it is the lowest offered rate or not.

References in periodicals archive ?
375 percent because they are tied to the short-term prime rates, financial sources said.
The article's main contribution, however, lies in the empirical methodology used to test for asymmetry in the response of the prime rate to short-term market interest rates.
Note that the red and green line that indicates underwriting combined ratio (green for profit and red for loss) generally lags or follows the average prime rate graphed in blue.
The new rate is the lowest since June 2003 when the prime rate stood at 1.
Since early this year, the prime rate has dropped from 8.
CO: Pilgrim Prime Rate Trust; Pilgrim America Prime Rate Trust ST: Arizona IN: FIN SU:
as well as other lenders Shinsei Bank and Aozora Bank, are expected to announce the raise on their long-term prime rate, charged on loans of more than one year to their most creditworthy corporate clients, on Wednesday, the sources said.
effective date of the prime rate change announced last evening by Dollar Bank.
Prime Rate Investors (Pink Sheets: PRRM) is a multi-media holding company with interests in outdoor sports, retail, e-tail, print, web, television and film.
Mizuho Corporate Bank said Monday it will cut its long-term prime rate by 0.
2 /PRNewswire/ -- Southern National Corporation (NYSE: SNB) announced today that it has completed its acquisition of Prime Rate Premium Finance Corporation of Florence, S.
In response to numerous inquiries by shareholders, Prime Rate Investors, Inc.