prime rate canada definition
Prime rate or prime lending rate is a term applied in many countries to reference an interest rate used by banks.The term originally indicated the interest rate at which banks lent to favored customersâi.e., those with good creditâbut this is no longer always the case.Some variable interest rates may be expressed as a percentage above or below prime rate.he prime rate varies little among banks and adjustments are generally made by banks at the same time, although this does not happen frequently. The prime rate is currently 3.25% in the United States and 2.85% in Canada.
DEFINITION of 'Prime Rate'. The interest rate that commercial banks charge their most credit-worthy customers. Generally a bank's best customers consist of large corporations.The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate which banks lend to one another.he interest rate that commercial banks charge their most credit-worthy customers. Generally a bank's best customers consist of large corporations.