The prime lending rate (PLR) is the interest rate banks offer to their best, most creditworthy customers — typically large corporations with excellent credit histories. It is the lowest rate a bank will charge, and all other loan rates are typically priced as "prime plus" a margin.
In the US, the prime rate closely follows the Federal Funds Rate plus 3%. When the Fed raises rates by 0.25%, the prime rate typically jumps 0.25% too. As of 2025, the US prime rate is around 7.5-8.5%. Variable-rate loans, credit cards, and HELOCs are often priced as prime + X%.
The prime rate affects millions of borrowers. A 1% increase in the prime rate on a $300,000 variable-rate mortgage adds roughly $250/month to payments. The Wall Street Journal publishes the consensus prime rate based on the rates of the 30 largest US banks.