What is the prime rate today?
Updated: March 17, 2025
The prime rate today is 7.50%
What is the current prime rate?
The prime rate today is 7.50%. That’s based on the latest rate published by the Wall Street Journal.1
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."2
Prime rate history—a look at historical prime rate
The prime rate reached 21.5% in 1980 and fell to 3.25% by 2008. After peaking in 1980, the prime rate gradually decreased throughout the 1980s and 1990s. During this period of extended economic growth, it typically ranged between 6% and 10%. A stable economy and low inflation contributed to lower borrowing costs for both businesses and consumers.
In the 2000s, the prime rate continued to decline. In response to the 2008 financial crisis, the Federal Reserve cut rates to near zero, bringing the prime rate to a historic low of 3.25%. Rates remained low through 2015 as the economy slowly recovered.
As the economy strengthened, rates began to rise gradually. However, with the onset of the COVID-19 pandemic, the Federal Reserve once again reduced rates to near zero to support economic activity, resulting in low borrowing costs.
The prime rate reached 21.5% in 1980 and dropped to 3.25% in 2008. After reaching its peak in late 1980, the prime rate gradually declined throughout the 1980s and 1990s. During this period of extended economic growth, the rate typically ranged between 6% and 10%. With a stable economy and low inflation, rates dropped, allowing lower-cost borrowing for businesses and consumers alike.
Prime rate history 2024
The data below shows the prime rate in 2024, with a peak of 8% in September, followed by a decrease to 7.75% in November, and a further reduction to 7.50% in December.3
Although the prime rate can change at any time, it is often influenced by broader economic conditions, making its trends somewhat predictable. Below is a look at the prime rate changes over the past 10 years, showing the dates and corresponding rates.
The prime rate fluctuated from 3.25% in 2008 to 8.00% by 2024, with notable adjustments during the financial crisis, COVID-19 pandemic, and efforts to control inflation.4
How does the prime rate work?
The Wise team put together a video explaining how the prime rate works, its link to the federal funds rate, and how banks use it to set loan interest rates. We also cover how prime rate changes affect personal finances, like credit cards and mortgages. Understanding the prime rate is crucial for anyone managing money in today’s economy.
Prime Rate definition
The prime rate is a financial term for the interest rate that banks offer to their most creditworthy customers for loans.
It influences borrowing costs for loans like car loans, credit cards, and mortgages. When the prime rate rises, borrowing becomes more expensive, which can reduce consumer spending and help control inflation.
How is the prime rate determined?
The prime rate is determined primarily through the actions of the Federal Reserve and major banks.
The Federal Reserve sets the federal funds rate, the interest rate banks charge each other for overnight loans. Major banks like Chase, Bank of America, Wells Fargo, US Bank, and Citi then use this rate as a baseline to establish their prime rate, typically setting it about three percentage points above the federal funds rate.
The Wall Street Journal U.S. prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks. This change usually occurs in response to adjustments in the federal funds rate by the Federal Reserve.
While individual banks can set their own prime rates, they generally align with the published WSJ prime rate to remain competitive. This rate serves as a benchmark for various consumer and business loan products and influences interest rates across the economy.
How does the prime rate change?
Banks set their own prime rates, but they're all typically the same or extremely close to each other. Most commonly, banks use a prime rate that’s three percentage points above whatever the federal funds rate is at that time.
Remember, the federal funds rate is a target set by the Federal Reserve for the interest rate banks charge each other for overnight loans to meet their reserve requirements. A reserve requirement is an amount the Fed requires banks to have on hand, mainly to ensure financial stability and guard against bank failures.
The prime rate directly impacts 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.
How does the prime rate affect me?
The prime rate affects you in several ways:
- Mortgages: Mortgage rates for new fixed-rate and adjustable-rate loans are heavily influenced by the prime rate. Once they reach the adjustment period, adjustable-rate mortgages typically follow current prime rates per your loan terms.
- Credit Cards: Many credit cards have variable rates tied to the prime rate. When the prime rate rises, your card's APR may increase. Conversely, you may see your rate decrease when the prime rate drops.
- Personal Loans: Interest rates for auto loans and HELOCs often follow the prime rate. That applies to new fixed-rate loans and ongoing adjustable-rate loans.
- Savings Accounts: Higher prime rates may lead to better interest on savings accounts and CDs. That’s a win for long-term savings, such as in high-yield savings accounts.
- Overall Economy: The prime rate influences lending and borrowing costs, affecting economic growth, employment, and inflation. These factors trickle down into the economy and may impact your financial well-being.
Understanding these effects can help you make informed financial decisions as economic conditions change.
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.
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 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.
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.
Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time.
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