All Utah First branches will be closed on January 21st in observance of Martin Luther King Jr Day. Online & Mobile Banking, and our ATMs will be available for your convenience.

If you are facing financial difficulties as a result of the U.S. Government shutdown, please contact us at (800) 234-0729.
70_Prime-Rate

What is the Prime Rate and How Does it Affect Me?

You’ve probably heard of about the prime rate before. But what exactly does it mean and how does it affect you and your interest rates? Here are a few things you should know about the prime rate.

What is the Prime Rate?

The prime rate is a foundational interest rate commonly used to determine short-term interest rates for consumers. It’s foundational because it’s generally the lowest rate a lender will charge its best customers. Most often, the prime rate is used as a basis, or point of reference, for determining interest rates depending on a borrower’s risk for defaulting on a loan. In other words, if a borrower has a low risk of default based on credit score and other factors, her interest rate will be closer to the prime rate (and vice versa).

How is the Prime Rate Determined?

Prime rates may differ between lenders. But in general, the prime rate used by individual lenders follows the Wall Street Journal’s prime rate, which is usually about 3 percent higher than the federal funds rate, or the rate banks charge each other for overnight lending.

Which Loans Follow the Prime Rate?

The prime rate is the underlying index that dictates the interest rates for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. So, when the prime rate goes up, your variable interest rates will usually follow. These loans are usually expressed as prime plus a certain percentage, which is determined by your credit rating and other factors. If you want to safeguard against possible interest rate hikes, some loans offer fixed rates. You can even find credit cards with a low fixed APR.

How Can You Follow the Prime Rate?

There are ways to track the prime rate. The Wall Street Journal, for example, publishes the most widely quoted measure of prime rate. The publication surveys large banks and publishes the consensus prime rate. By tracking the prime rate, you can know whether your variable interest rates may be going up or down. And you can get an idea about the base interest rates your lender may be currently offering.

How does the Prime Rate Affect You?

The prime rate is outside of your control. But understanding the prime rate and being aware of sometimes unpredictable changes in interest rates can help you stay on top of your payments and help you minimize your credit card debt.

News & Events
Jan 16, 2019 / Money Tips

It’s the beginning of a new year and your list of resolutions is still fresh in your mind. If you resolved to resolve your debt this year, debt consolidation might be the perfect way to give you a head start. Here are a few questions to help you better understand debt consolidation....

Jan 07, 2019 / Local Utah

Relationships are an essential part of life. They allow you to stay focused on what’s most important and help you follow through with life goals. The same is true with your banking relationships. In fact, having a good relationship with your local credit union can help you focus on your...

Dec 28, 2018 / Home Equity

The holidays are nearly over – the most expensive season of all. The food, the parties, the presents – they make the season special. But they don’t always come cheap. If you’re wondering about the best way to afford this year’s holiday expenses, a home equity line of credit may...

Corporate
200 E South Temple
Salt Lake City, Utah 84111
800-234-0729
Monday - Friday: 9:00 am - 5:30 pm
View In Google Maps
Routing & Transit Number: 324079500
NMLS # 446035

Utah First Federal Credit Union is federally insured
by the National Credit Union Administration.