Prime Rate

The prime rate, often referred to as prime, is the interest rate charged by central and commercial banks to borrowers with the strongest credit ratings, typically large corporate entities. In the United States, the prime rate is influenced by the federal funds rate, the overnight rate at which banks lend to each other, determined by the Federal Reserve. The prime rate serves as a benchmark for various retail bank interest rates, including those for mortgages, personal loans, and small business loans.