How is the prime rate set?

Answer When a bank lends you money, it charges you interest on the amount borrowed. The bank uses many methods to determine the rate of interest they they charge you. The lowest rate a bank offers is the ... Read More »

Top Q&A For: How is the prime rate set

What is the difference between the prime rate&the target rate?

The prime rate and the target rate are both interest rates that help determine how much it costs to get a loan from the bank. One rate influences the other.The Prime RateThe prime rate is the benc... Read More »

How Does the Prime Rate Impact a Mortgage Rate?

The prime rate is set by the Federal Reserve and is the interest rate lenders charge their most creditworthy customers. The "prime" fluctuates in relation to the fed fund rate from the Federal Res... Read More »

How Does the Key Interest Rate Compare to a Prime Rate?

The key interest rate that controls the prime rate is known as the overnight fed funds rate. This key rate is the interest rate that banks lend and borrow money at between each other. On the other ... Read More »

The Meaning of Discount Rate and Prime Rate?

Regional Federal Reserve Banks make loans to depository institutions through its lending facility. The lending facility is called the "discount window." The interest rate charged by the Fed to de... Read More »