BANKING AFFAIRS

Detailed explanation-1: -Prime lending rate is also known as prime rate. It refers to the rate of interest bank charge its main and prime customers. Prime customers are also known as favored customers, that means, customers with good credits.

Detailed explanation-2: -The term prime rate refers to the interest rate that commercial banks charge their most creditworthy customers.

Detailed explanation-3: -Also known as the prime lending rate, it is the basic or default interest rate that you could be charged when borrowing for big purchases such as a home or a car. The prime interest rate is linked to the repo rate. This is the interest rate at which the commercial banks borrow money from the Reserve Bank.

Detailed explanation-4: -Rates Affected by the Fed Funds Rate One of the most significant rates influenced by the FFR is the prime rate. That’s the prevailing interest rate that banks charge their best customers. The prime rate affects many consumer interest rates, including deposits, bank loans, credit cards, and adjustable-rate mortgages.

Detailed explanation-5: -The prime rate is the interest rate that customers with the highest credit ratings pay to commercial banks when borrowing money. In other words, it’s the lowest interest rate that a bank would charge its most creditworthy clients when giving loans.