compare<\/u><\/a> and get the rate closest to the prime interest rate or even below it.<\/b><\/p>The prime rate is derived from the federal funds rate. The federal funds rate is a rate that is charged by the banks for lending money within themselves overnight with their excess reserve.\u00a0<\/b><\/p>
The federal funds rate is set by the Federal Reserve. This rate directly affects the prime lending rate. If the Federal Reserve increases this rate the prime interest rate will also increase and if the fed rate goes down so will the prime.<\/b><\/p>
The prime interest rate is usually three percent over the federal funds rate. This means if the federal funds rate is two percent the prime lending rate would be five percent.\u00a0<\/b><\/p>
There is no set policy or regulation that the prime has to be three percent it could be higher or lower based on other market factors it is just an average over the years.<\/b><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t