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 ?
They are also offered a low interest rate of prime + 0.5 percent.
* A $1,200,000 new mortgage for a 5-year arm, 10 year balloon, 25-year amortization schedule with a $1,100,000 Line of Credit for a floating rate of Prime + 1% for a 10-Year term on a 4 story walk-up mixed use building with 3 apartments and two stores in New York City.
The credit facility, with a maximum borrowing amount of USD50,000 for business purposes, is available to creditworthy professionals at a rate of prime plus 0.99 percent with a rate floor of 4.25 percent.
Judah Hammer and Michael Kesselman of Meridian's New York office negotiated to secure a rate of Prime + 5 over a 12-month, interest-only term.
The loan featured a rate of prime + 4% with a 1 year term interest only.
The loan featured a rate of Prime +1/2% with an 18 month term, interest only.
The loan featured a rate of Prime +1% and an 18 month term, interest only
The $14 million construction commitment calls for an interest rate of prime plus 2 percent, a two point closing fee and a two point exit fee.