In general, the United States premium rate runs approximately 300 basis points (or 3 percent) above the federal funds rate . The Federal Open Market Committee (FOMC) meets eight times a year. Other rates, including the prime rate, derive from this base rate.

Reviews The most Commonly reconnu prime rate index is the Wall Street Journal prime rate (the WSJ prime rate), published in The Wall Street Journal . Unlike other indexed rates, Rather, it changes whenever the borrowers obtain funds. The WSJ defines the prime rate as “The largest bank of the nation’s 30 largest banks.” It has been speculated that this is not only the real definition (and that the prime rate is simply the fed funds target rate + 3), because most corporate loans are indexed to LIBOR . Citation needed ]

When 23 out of 30 largest US banks change their prime rate, the WSJ prints a composite prime rate change.

Uses

The variable rate mortgages (ARM) and other variable rate short term loans. It is used in the calculation of some private student loans . Many a credit card with variable interest rates has its rate specified as the prime rate (index) plus a fixed value commonly called the spread.