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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Prime Rate

Definition:

The lowest interest rate that banks offer to low-risk folks.

You know that number banks advertise on mortgage and financing ads? The rate that includes the fine print "rates may vary"? That's the prime rate.

If you pay your bills on time, have a good credit history, and are very likely to pay the bank back, you might get the prime rate. If your credit score is not so great or you make fun of the lender's tie, you'll get charged a lot more to borrow money.

Them's the breaks.