What is the prime rate?
Recently, the U.S. prime rate raised from 3.25% to 3.50%. If you are like me, you probably asked yourself, “What even is the U.S. prime rate?” According to bankrate.com, the term “prime rate” refers to the interest rate that banks charge their preferred customers, or those with the highest credit ratings. It is used to determine borrowing costs on many short-term loan products. So after I learned that, my next thought was, “Who sets the prime rate, and what makes them so special?” Again, bankrate.com had the answer, “The prime rate is set by the Federal Reserve Board, and it is the interest rate that commercial banks charge each other for overnight lending.” The prime rate is calculated each day by a number of sources, but The Wall Street Journal is considered to be the “official” source. The WSJ sets the prime rate after analyzing the base rate of corporate loans from 75% of the 30 largest banks in the nation.
So, now you know! For some of the most competitive rates on the market, give First Capital a call. We love getting our clients the best loan pricing possible.