The interest rate that banks charge to corporations that are considered excellent risks.

Note: The prime rate is usually the lowest prevailing interest rate; if it rises, rates available to consumers will soon rise.

prime rate

A short-term interest rate quoted by a commercial bank as an indication of the rate being charged on loans to its best commercial customers. Even though banks frequently charge more and sometimes less than the quoted prime rate, it is a benchmark against which other rates are measured and often keyed. For various reasons, a rising prime rate is generally considered detrimental to security prices. Also called prime.