prime rate

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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Banks lower their prime lending rate to 7 per cent at month-end.
"In the past, the executive committee has expressed its concern about the magnitude of the spread between the bank rate and the prime lending rates of commercial banks," said Alweendo
cents and banks raise their prime lending rate by 2 percentage points to 8 1/4 per cent.
Fifth Third had previously increased its prime lending rate from 5 to 5.25 percent on September 26, 2018.
Unlike the earlier prime lending rate or PLR, which was an arbitrary benchmark, the base rate is calculated according to a formula which takes into account the cost of funds.
Mizuho Corporate Bank said Thursday it will cut its long-term prime lending rate by 0.1 percentage point to 2.2 percent per annum, effective Friday.
The interest rate will float at 1.25 percent over the prime lending rate on the construction loan and then will convert into a permanent loan at certificate of occupancy at either 2.25 percent over the five-year Treasury issue or at 2.5 percent over the 10-year Treasury issue.
M2 EQUITYBITES-August 5, 2019--KeyCorp revises prime lending rate
BANKING AND CREDIT NEWS-December 31, 2018-BMO Harris Bank raises US prime lending rate to 5.50%
Bank announces 5.5% higher prime lending rate with effect from December 2018
State Bank of India (SBI) (SBIN.NS) (500112.BO) (OTC: SBKJY), India's largest lender by assets, has said that it will raise its base rate, the benchmark prime lending rate and interest rate on certain deposits, effective from Monday.

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