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Updated: January 31, 2024

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Stacking coins with the two red roof house and the calculator lean against the sunrise for calculate the home payment interest of house loan

What is the prime rate today?

NAOWARAT / Shutterstock

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Updated: January 31, 2024

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.

The prime rate today is 8.50%

The prime rate is the interest rate major banks offer to their borrowers with the best credit — in other words, the least risky ones.

This key benchmark typically fluctuates when the Federal Reserve increases or decreases its policy rate. The reserve began implementing more aggressive tightening measures in 2022 in order to help quell inflation.

Increases in the prime rate and the funds rate equate to higher borrowing costs for everyday loans such as car loans, home equity lines of credit and credit cards. Since the rate increases make borrowing more expensive, they can lead to less consumer spending, which then helps to reduce inflation.

What is the current prime rate?

The current prime rate among major U.S. banks is 8.50%. The prime rate normally runs three percentage points above the central bank’s federal funds rate, which the Fed is holding steady at a target range of between 5.25% to 5.50%.

Minutes of the June Fed meeting, released on July 5th, revealed interest rate hikes were likely to increase again after June's unexpected pause, and that there was debate among policy makers over the decision to keep rates the same. 

June 14th marked the first pause after 10 consecutive increases by the Federal Reserve. Many policy makers favored a quarter point increase, the minutes revealed, but ultimately, the 11 voting members opted to hold rates steady.

The Fed raised rates in July by 0.25%, but on September 20th, it announced it would pause more increases. On January 31, the Fed announced it would continue to keep the key rate unchanged, for now.

The Fed has been raising rates since March 2022 to combat inflation, spurred on by factors such as increased demand and supply chain issues for goods like gas.

WSJ prime rate

The Wall Street Journal publishes what's considered to be the definitive U.S. prime rate, which is determined through a survey.

As the publication explains, its Wall Street Journal prime rate is "the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks."

This week
1 week ago
1 month ago
3 months ago
1 year ago
Federal Funds Rate (current target range: 5.25% to 5.50%)
5.50%
5.50%
5.50%
5.50%
4.75%
WSJ prime rate
8.50%
8.50%
8.50%
8.50%
7.75%

How does the prime rate change?

Banks set their own prime rates, but they're all typically the same — three percentage points above whatever the federal funds rate happens to be.

The federal funds rate is the interest rate banks charge each other for overnight loans so they can meet their reserve requirements. Those are the amounts of money the Fed requires banks to have on hand at the end of each business day, partly to guard against bank failures.

The prime rate has a direct impact on certain types of credit, namely loans with rates that are adjustable, not fixed — but it still influences other interest rates in a more roundabout way.

Prime rate history

Date in effect
Rate
January 31, 2024
8.50%
December 13, 2023
8.50%
November 1, 2023
8.50%
September 20, 2023
8.50%
July 26, 2023
8.50%
June 14, 2023
8.25%
May 4, 2023
8.25%
March 22, 2023
8.00%
Feb. 1, 2023
7.75%
Dec. 15, 2022
7.50%
Nov. 3, 2022
7.00%
Sept. 22, 2022
6.25%
July 27, 2022
5.50%
June 15, 2022
4.75%
May 4, 2022
4.00%
March 17, 2022
3.50%
March 16, 2020
3.25%
March 4, 2020
4.25%
Oct. 31, 2019
4.75%
Sept. 19, 2019
5.00%
Aug. 1, 2019
5.25%
Dec. 20, 2018
5.50%
Sept. 27, 2018
5.25%
June 14, 2018
5.00%
March 22, 2018
4.75%
Dec. 14, 2017
4.50%
June 15, 2017
4.25%
March 16, 2017
4.00%
Dec. 15, 2016
3.75%
Dec. 17, 2015
3.50%

More on the prime rate

  • Prime rate definition

    +

    The prime rate is the interest rate major banks offer to their borrowers with the best credit.

    Technically, there is no single U.S. prime rate. Banks set their own prime rates, but they're generally all the same and move in lockstep with the Fed's benchmark rate.

  • Who sets the prime rate?

    +

    The prime rate piggybacks off the federal funds rate, which is one of the Federal Reserve's primary tools for nudging the economy. Banks typically take the federal funds rate and add three percentage points to get their prime rate.

    The central bank doesn't exactly set the federal funds rate; it's ultimately decided by market supply-and-demand forces. But the Fed's policymaking panel — called the Federal Open Market Committee, or FOMC — establishes a target for the federal funds rate.

  • Prime rate and variable-rate loans

    +

    If you have credit cards or a home equity line of credit, you feel the movements in the U.S. prime rate most closely.

    Interest rates on those products change in sync with the prime rate. The adjustable rate on a HELOC might be advertised as "prime plus 1%" or "prime plus one," for example.

    In similar fashion, a credit card might have an annual percentage rate, or APR, described as "prime plus 11.49%" or "prime plus 9.99%." Due to increases in the prime rate, the interest you pay on loans such as your HELOC and credit card balance will increase as well.

  • Prime rate and other types of loans

    +

    Interest rates on auto loans are often tied to the U.S. prime rate too, and many adjustable-rate mortgages, or ARMs, adjust in tune with the prime rate.

    The interest on ARMs is fixed for the first several years, then it moves up or down along with a benchmark interest rate — often the prime rate. A common adjustable-rate mortgage is the 5/1 ARM, with an interest rate that's fixed for five years and can adjust every one year after that.

    The interest rates on personal loans and popular fixed-rate mortgages do not dovetail with the prime rate and the federal funds rate, but there is an indirect effect on what borrowers pay.

    After the Fed cut its federal funds rate to near zero in 2020 and created a climate for very low interest rates, mortgage rates dropped to historic lows. Rates on personal loans fell too.

    But long-term mortgage rates don't always move in the same direction as the prime. For example, 30-year mortgage rates fell from December 2016 to December 2017 — even as the prime rate rose from 3.75% to 4.5%.

Compare personal loan rates

— With files from Rose Shilling

About our author

Leslie Kennedy
Leslie Kennedy, Senior Content Editor

Leslie Kennedy served as an editor at Thomson Reuters and for Star Media Group, followed by a number of years as a writer and editor and content manager in marketing communications, before returning to her editorial roots. She is a graduate of Humber College’s post-graduate journalism program and has been a professional writer and editor ever since.

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