Current Prime interest rate History
The prime interest rate is that rate of interest that most financial lenders charge to their high valued clients or worthy customers. The rate of interest is different slightly between banks and the lenders have the authority to revise the rate roughly at the same time. The prime interest rate is actually a benchmark or a guide that helps you to determine the interest rates that are applicable to other financial products in the market. These financial products may include home equity, mortgage and the other forms of loans. There are certain cases where the Prime interest rates are also used to determine the rate at which lenders give out student loans. This rate is also deployed by credit card companies to determine the rate of interest on their cards too. The real prime interest rate is affected by the other interest rates that are available in the market. In most banks, there are only a small amount of customers who are offered this rate. There are many financial institutions that rely on this rate to determine the interest rates of their financial products. This rate is also affected by the rates that have been laid down by the Federal Reserve. There are two rates one is the discount rate and the other is the Federal Reserve rate. The discount rate is that rate that the depository institutions use in order to borrow money from the regional Federal Banks. The Fed rate is that rate of interest that the Federal depository institutions use to lend money to one another. Under normal circumstances the prime rate of interest is set at a value of 300 points or 3 per cent above the Federal rate of interest that the commercial banks adopt in order to lend overnight loans to one another. The discount interest rate that is laid down by the Federal Open Market Committee is the sole body that determines the Federal funds rate. This committee meets on a regular basis to determine a target for the Fed funds rate. The other interest rates that are determined are generally 3 % higher.