Prime rate

The prime rate is a type of interest rate that is usually used by banks for borrowing money. It is the rate that banks charge their customers when they borrow money, like when they get a loan or a credit card. The prime rate is usually the lowest interest rate banks will offer and is used as a standard for other interest rates. Banks decide what they will charge as a prime rate and it is usually a little bit higher than the interest rate the bank can get from the Federal Reserve. So, if the Federal Reserve has an interest rate of 3%, the bank might charge its customers 4% as the prime rate.