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.

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 ?
7 million as a result of the refinancing which pales in comparison to the benefits the company and shareholders will reap through the Non-Convertible four (4) year term note at an attractive interest rate of Prime plus 1.
The facility bears an interest rate of prime plus 1.
0 million based on certain percentage of eligible accounts receivable and inventories at an interest rate of prime plus 2 percent per annum, subject to certain reductions based upon growth in the company's stock price.
Home Equity Line of Credit - Customers may apply for a home equity line of credit with a variable interest rate of Prime - .
The loan bears interest, at the option of Empire, at a rate of prime plus 2% or Libor plus 4.
The loan matures with all principal due on December 8, 2009, interest payable quarterly commencing on March 9, 2005 at a rate of Prime plus 1%.
0 million secured convertible term note with an initial interest rate of prime plus 3 percent, secured by the assets of Hesperia Holding Inc.
This financing is secured by all of the existing assets of CSI and its United States subsidiaries, as well as companies to be acquired by CSI with the funds, and bears interest at the annual rate of prime plus 1.
Outlook is entitled to receive interest on the outstanding portion of the purchase price at the rate of prime plus 2% and will hold a secured interest in the assets until such time as the $50,000 is paid.
The First Commercial Bank line of credit has an interest rate of prime plus one percent and is secured by Digital Fusion's receivables and certain guarantees.
The financing consists of a Secured Convertible Term Note (the "Note") bearing interest at the rate of prime plus two and one-half percent (2.
0 million dollars at an interest rate of Prime Rate plus 3/4% and is based on the domestic receivables and inventory of the Company.