# Prime Rate

- The interest rate that commercial banks charge their most credit-worthy customers. Generally a bank's best customers consist of large corporations. The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate which banks lend to one another. The prime rate is also important for retail customers, as the prime rate directly affects the lending rates which are available for mortgage, small business and personal loans.
Default risk is the main determiner of the interest rate a bank will charge a borrower. Because a bank's best customers have little chance of defaulting, the bank can charge them a rate that is lower than the rate that would be charged to a customer who has a higher likelihood of defaulting on a loan.

*Investment dictionary.
Academic.
2012.*

### Look at other dictionaries:

**Prime rate**— Prime rate, or Prime Lending Rate, is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, i.e., those with high credibility,… … Wikipedia**Prime Rate**— Prime|rate, die; , Prime Rate, die; [ pra̮imreɪt ; engl. prime rate, aus: prime = Haupt ; hauptsächlich u. rate = Rate; Zins , Steuersatz] (Wirtsch., Bankw.): (in den USA) Zinssatz, den Großbanken für ihre Kredite berechnen u. der die Funktion… … Universal-Lexikon**prime rate**— n: an interest rate formally announced by a bank to be the lowest available at a particular time to its most creditworthy customers – called also prime, prime interest rate; Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 … Law dictionary**prime rate**— n. Finance the most favorable interest rate charged by a commercial bank on short term loans to large corporations: also prime interest rate or prime lending rate … English World dictionary**prime rate**— prime rates N COUNT A bank s prime rate is the lowest rate of interest which it charges at a particular time and which is offered only to certain customers. At least one bank cut its prime rate today … English dictionary**prime rate**— prime′ rate′ n. ban bus the minimum interest rate charged by a commercial bank on short term business loans to large, best rated customers or corporations Also called prime 18) prime′ in′terest rate … From formal English to slang**prime rate**— or prime interest rate Fin the lowest interest rate that commercial banks offer on loans … The ultimate business dictionary**prime rate**— ● prime rate nom masculin (anglais prime rate, meilleur taux) Aux États Unis, taux d intérêt appliqué par une banque pour les crédits à court terme accordés à ses meilleurs clients … Encyclopédie Universelle**prime rate**— prime .rate n the lowest rate of interest at which companies can borrow money from a bank →↑base rate … Dictionary of contemporary English**prime rate**— prime ,rate noun count the lowest rate available for borrowing money … Usage of the words and phrases in modern English**prime rate**— noun : an interest rate formally announced by a bank as the lowest normally available at a particular time to its most creditworthy customers * * * Banking. the minimum interest rate charged by a commercial bank on short term business loans to… … Useful english dictionary