The WSJ Prime Rate is usually approximately 3% higher than the federal funds rate. The WSJ Prime Rate is different from the “federal funds rate," which is the rate that banks charge to each other for overnight loans to fulfill their reserve funding requirements. The WSJ Prime Rate is defined by the Wall Street Journal as the “base rate posted by at least 70% of the nation's largest banks." The Wall Street Journal conducts a regular, ongoing market survey of America's biggest banks to see what interest rate they are charging to their “prime" customers (customers with highest-rated credit) for short-term loans. It’s published each day by the Wall Street Journal, and it is an important method for people to keep track of the interest rates that banks are charging for loans and credit lines. The WSJ Prime Rate is essentially the base interest rate that banks are charging borrowers, and it’s referenced by lenders and borrowers alike. Perhaps you've never even heard the term, but everyone who has a credit card or a car loan or any other form of consumer debt, especially those with a variable interest rate, should have a basic understanding of the WSJ Prime Rate and how it affects you.
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