What is the prime rate vs. the Fed rate?

The Fed rate is a suggested rate for banks to use when loaning money to each other. This rate provides the foundation for the prime rate, which banks use to charge borrowers. Banks create the prime rate by adding a margin to the Fed rate.

What is a bank's prime rate?

A bank’s prime rate is the minimum interest rate it charges customers for loans. The prime rate depends on the current market dynamics.

How often does the prime rate change?

The prime rate doesn’t have a set schedule for when it changes. Instead, it responds to emerging economic dynamics. Generally, it changes when the federal funds rate adjusts. As a result, economic stability can result in years without the prime rate changing.

Is there a limit on the prime rate?

The prime rate has no limit in either direction. So, it can be as low or as high as the lending industry sees fit.

Guide To The Prime Rate | Quicken Loans