Wall Street Journal Prime Rate

If you haven’t heard of the Wall Street Journal Prime Rate, you aren’t super rich with amazing credit, getting short-term loans from the bank. The Wall Street Journal Prime rate is the average of the top tier (excellent-credit customers only) prime rates for short-term loans of the ten largest banks in the U.S.

FYI—a “prime rate” is the interest rate commercial banks charge their best customers, like large corporations. It’s called “prime” to reflect the rate for their “prime” customers (no, Amazon was not the first one to come up with “prime customers”). This is usually the same rate that banks charge each other, called the “overnight rate.”

Yes, this is still relevant to you even if you’re not superrich or a big corporation, because the prime rate affects the rates of other things, like credit cards, personal loans, and business loans. In general, rates typically have a domino-like effect, which is why the market cares about the Wall Street Journal Prime Rate.