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Prime rate



         


In North American banking, the prime rate is the interest rate charged by lenders to borrowers who they consider most creditworthy. It varies little among banks, and adjustments are generally made by banks at the same time, although this does not happen with great frequency.

In general, the prime rate is 3 percent above the Federal Funds Rate, the interest rate banks are forced (by the Federal Reserve) charge to each other.


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