Prime Rate

The article may contain affiliate links from one or more partners. Learn how we make money to continue our financial wellness mission.

The interest rate that banks charge to preferred customers. Changes in the prime rate are publicized in The business media. Prime rate can be used as the basis for adjustable rate mortgages (ARMs) or home equity lines of credit. The prime rate also affects the current interest rates being offered at a particular point in time on fixed mortgages. Changes in the prime rate do not affect the interest on a fixed mortgage.