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Thank you Mr. Vinod with agreements with your answer, but the interest rate is different from other countries and from developing countries to developed countries and stability in the countries at risk to countries where large credit score all these things Tair interest and all decisions taken by the state to protect the capital by an average of
Prime rate or prime lending rate is a term applied in many countries to reference an interest rate used by banks. The term originally indicated the interest rate at which banks lent to favored customers—i.e., those with good credit—but this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.
My understanding is that prime interest rate is the rate which government offers to banks. All banks borrow money from the government and lend to its clients.
Banks charge interest on top of prime rate to its clients.
For example, if the prime is2.0%, the bank will probably charge2.5 or3.0% to borrowers.
The prime rate is an important index used by banks to set rates on many consumer loan products, such as credit cards or auto loans. If you see that the prime rate has gone up, your variable credit card rate will soon follow.
Prime lending rate is a term applied in many countries to reference an interest rate used by banks.
Prime interest rate is a reference interest rate commercial banks use when issuing variable interest rate loans to their customers.
The U.S. Prime Rate is a commonly used, short-term interest rate in the banking system of the United States. All types of American lending institutions (traditional banks, credit unions, thrifts, etc.) use the U.S. Prime Rate as an index or foundation rate for pricing various short- and medium-term loan products. The Prime Rate is consistent because banks want to offer businesses and consumers loan products that are both profitable and competitive. A consistent U.S. Prime Rate also makes it easier and more efficient for individuals and businesses to compare similar loan products offered by competing banks.
When newspapers, academics, investors and economists refer to the National, Fed, U.S. or WSJ Prime Rate, it is widely accepted that they are in fact referring to The United States Prime Lending Rate as listed in the Eastern print edition of the Wall Street Journal® (WSJ). Furthermore, each U.S. state does not have its own individual Prime Rate, so the "New York Prime Rate" or the "California Prime Rate" are in fact the same as the United States Prime Rate.
Prior to mid-December2008, the WSJ Prime Rate was determined by polling thirty (30) of America's largest banks. When twenty-three (23) of those30 banks had changed their prime lending rate, The WSJ would respond by updating its published Prime Rate. Effective December16,2008, however, the WSJ now determines the Prime Rate by polling the10 largest banks in the United States. When at least7 out of the top10 banks have changed their Prime, the WSJ will update its published Prime Rate.
Providers of consumer and commercial loan products often use the U.S. Prime Interest Rate as their base lending rate, then add a margin (profit) based primarily on the amount of risk associated with a loan. Moreover, some financial institutions use Prime as an index for pricing certain time-deposit products like variable-rate Certificates of Deposit.
It's important to note that the Prime Rate is an index, not a law. Consumers and business owners can sometimes find a loan or credit card with an interest rate that is below the current Prime Lending Rate. Lenders will sometimes offer below-Prime-Rate loans to highly qualified customers as a way of generating business. Furthermore, below-Prime-Rate loans are relatively common when the loan product in question is secured, as is the case with home equity loans, home equity lines of credit and car loans.
Every U.S. bank sets its own Prime Rate. However, the Prime Rate is invariably tied to America's cardinal, benchmark interest rate: the Federal Funds Target Rate (also known as The Fed Funds Target Rate.) The Fed Funds Target Rate is set by a committee within the Federal Reserve system called The Federal Open Market Committee (FOMC). The FOMC usually meets every six weeks, and it is at these meetings that the FOMC votes on whether or not to make changes to the Federal Funds Target Rate. When the Fed Funds Target Rate changes, it is almost a certainty that the Wall Street Journal Prime Rate will also change. If the FOMC votes to make no changes to The Fed Funds Target Rate, then it is almost a certainty that the WSJ Prime Rate will also remain unchanged. Since the second quarter of1994, a rule of thumb for the U.S. Prime Rate has been:
U.S. Prime Rate = (The Fed Funds Target Rate +3)
The FOMC's primary objectives are to keep inflation under control and maintain steady economic growth with maximum sustainable employment within the United States.
The U.S. Prime Interest Rate is used by many banks to set rates on many consumer loan products, such as student loans, home equity lines of credit, car loans and credit cards. If you read or hear about a change to the U.S. Prime Rate, then any loan product that is tied to the Prime Rate will also change, like variable-rate credit cards or certain adjustable-rate mortgages.
sorry but i didn't have information for that
Agree with Patel.
Prime rate is the rate of interest charged by commercial banks to the first class corporate borrowers for short term loans. The big corporates are considered as First Class as the risk of lending is very less and repayments are assured i.e. less problems on account of non-repayment. Prime rate is also called "reference rate". This would be normally the lowest rate of interest charged by banks on any loan other than government sponsored loans. Prime rate is a bench mark and other borrowers are charged taking these as lower ceiling for interest as any type of borrowers are concerned.
