Prime rate interest is the interest rate offered by commercial banks to high-profile clients with exceptional credit.
What is prime rate interest?
The prime rate interest is based on the rate that banks lend money to one another, also known as the federal funds rate. However, the prime rate is not universal. Each bank can set its own prime rate.
Mortgage rates and even personal loan rates are based on the prime rate. These other interest rates are typically higher than the prime rate.