Wall Street Journal Prime Rate
|Prime Rate||Updated Date|
|3.5||January 20, 2016|
What it means: The initials stand for The Wall Street Journal, which surveys large banks and publishes the consensus prime rate. The Journal surveys the 30 largest banks, and when three-quarters of them (23) change, the Journal changes its rate, effective on the day the Journal publishes the new rate. It's the most widely quoted measure of the prime rate, which is the rate at which banks will lend money to their most-favored customers. The prime rate will move up or down in lock step with changes by the Federal Reserve Board.
How it's used: The prime rate is an important index used by banks to set rates on many consumer loan products, such as credit cards or auto loans. If you see that the prime rate has gone up, your variable credit card rate will soon follow.
Libor Rate or ICE Libor Rate is a benchmark interest rate that financial institutions and banks charge each other for short term loans. Libor refers to London Interbank Offered Rate. It is among the most common of benchmark interest indexes used to make adjustments to adjustable rate mortgages. It is based on five currencies: U.S. Dollar, Euro, Pound Sterling, Japanese Yen and Swiss Franc and serves seven different maturities: overnight, one-week, and 1,2,3,6 and 12 months.
How is it used? – It serves as a first step to calculating interest rates on various loans throughout the world.
Average US Dollar Libor Rate 2015 – 0.761%
How is it used? – It is used as an interest rate for a transaction that involves exchange of cash flows between two parties on interest payments for a particular principal amount