A banks prime interest rate is the percentage charged to a loan by lenders to the customers that prove to be the least financial risk. In other words, a prime interest rate is the lowest possible number published and all banking and lending institutions start the interest, charged to a loan, at this numerical percentage point. Knowing this number at any particular time is helpful when a consumer is shopping for loans for various purposes, including home mortgages. Many financial investors make decisions about when to buy or sell or save based on the national interest rate and what the bank rate will be doing in the future. Economic trends affect these numbers and the Federal Funds rates are determined by the open markets.

The Federal Funds Rates are used in determining the prime interest rate for any lending market. The Federal Open Market Committee will use the Federal Funds Rates to move this number. These fluctuating markets can have affects on what interest is gained through savings programs, such as CDs, Money Market Accounts, savings accounts, and more, as well as affecting the amount of interest charged to a loan by banking or lending institution. Changes in the banks prime interest rate can also have influence on the stock market with trading, ultimately affecting an entire economic culture at any given time. The Federal Government closely watches the economy and adjusts the rates to offer the economy stability in volatile markets.

These rates and numbers will be used for a variety of financial transactions. The prime interest rate will determine what consumers pay for most of the money they borrow. Bank numbers will be used to guide rates for most credit card debt, new mortgages, home equity loans and various lines of credit. The prime rates can also determine what amount a consumer is charged for auto loans and personal loans, as well. When purchasing a small business or when applying for a business loan to develop business further, those seeking small business loans will find that their loans are also indexed to the banks prime interest rate. Most all loans, except for loans designed for high-risk borrowers, are indexed to the prime rate, which does not change at regular or scheduled intervals.

To get the best or lowest possible amounts on any loan that a consumer may be seeking, there are a few suggestions to be kept in mind. First, having a good credit history will pay off time and again, as loans are needed for various reasons. Banking and lending institutions will always review one or more personal credit reports when considering an applicant for a loan. Mortgage companies and other lenders carefully review credit reports and credit scores to determine if a consumer is worth the risk of a prime rate. Consumers or borrowers who have low credit scores or who have poor payment histories will be charged a higher amount. These higher rates are charged to anyone determined to be a credit risk, with the lender making more money initially with each payment. Only those with healthy credit reports and solid credit history receive the banks prime interest rate.

Consumers possessing a good personal credit report and looking for a good deal on a loan for business, homes, or cars may want to conduct a little comparison-shopping to find the best rate possible. Comparison-shopping proves time and again to be the number one way to getting the best deals, and this includes the best deals on rates as well. Never assume that a credit score automatically guarantees the lowest possible rates. Consumers should know the current prime interest rate published before comparison-shopping. Knowing this information can give a borrower the knowledge to effectively negotiate terms and conditions with lenders.

A great place to begin comparison shopping for the banks prime interest rate is online through the Internet. The Internet is exploding with lending agencies that compete against one another for business, and if the consumer has a healthy credit score, they will be pleasantly surprised at how accommodating the current lending market can be. The vast competition throughout the Internet has changed the face of the lending industry, and now consumers have more negotiation power than ever. Before contacting various lending agencies, consumers will want to know their own credit score and review their credit report, finding any discrepancies before submitting an application to a lending institution.

Taking the time to review a personal credit report, finding information on the available rates, and comparison shopping for the lowest rates offered on loans can make a difference in an over-all financial picture. Getting information is getting wisdom before making commitments with lenders. The Bible teaches Christians to seek out those who are wise when making decisions. While researching a prime interest rate and getting credit history together, the consumer must be sure and speak with financial advisors about current trends and where the markets are headed. "Apply thine heart to instruction, and thine ears to the words of knowledge." (Proverbs 23:11)

Add to: File Insurance Business article Teen Photo Images