Reviewed 11 August 2026 · Sourced from the Federal Reserve H.15 release, FRED and the CFPB
The prime rate is set by banks, not by the Federal Reserve. It is the base rate large U.S. commercial banks post for short-term loans to their best customers, and as of the H.15 release dated 10 August 2026 it stands at 6.75%.
The Fed publishes prime; it does not decide it. What the Fed decides is the federal funds target range. Banks then choose — by convention, not by rule — to post prime at the top of that range plus three percentage points. The result looks exactly like the Fed setting prime, which is why almost everyone believes it does.
- Banks set prime. The Federal Reserve does not. The Fed publishes the figure in its H.15 release as the "bank prime loan" rate. The number itself is posted by commercial banks.
- Prime has equaled the top of the federal funds target range plus 3.00 percentage points at every Fed move since the December 2015 liftoff. Today that is 3.75 + 3.00 = 6.75%.
- It is a convention, not a law. No statute or regulation requires a bank to price off the target range, and nothing stops one from breaking with it.
- Variable-rate credit cards, HELOCs, business and personal lines of credit and some private student loans are indexed to prime. Fixed mortgages, home equity loans, federal student loans and most auto loans are not.
- When prime moves your card's APR moves by the same amount — and your issuer does not owe you 45 days' notice, because index-driven increases are specifically exempt under Regulation Z.
- Almost nobody borrows at prime. Your rate is prime plus a margin the issuer set when it approved you, and that margin never changes.
What the prime rate actually is
Start with the thing nearly everyone has backwards.
Banks set it. The Fed publishes it — the number appears in the Fed's H.15 release under the heading "Bank prime loan" — but publishing a rate and setting one are different jobs. What the Fed sets is the target range for the federal funds rate. Prime is what commercial banks decided to do about that, and they were free to decide otherwise.
The official definition is one sentence. Footnote 7 of the H.15 release describes prime as the "Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks," and adds that "Prime is one of several base rates used by banks to price short-term business loans."
Three words in there are doing most of the work.
Posted
Prime is not traded, bid on, auctioned or discovered in a market. Each bank publishes a number and the Fed collects them. That makes prime a survey of announcements rather than a price, and it is why prime moves in clean quarter-point steps and then sits perfectly still for months at a time while genuine market rates wobble every day. A real market rate never lands on 6.75% and stays there for eight months. A posted rate does exactly that.
Majority
The published figure is the rate a majority of the largest twenty-five banks have posted. It is not an average, so it never drifts to two decimal places. Enough banks move together, or the number does not change at all.
Base rate for short-term business loans
Prime was built for commercial lending, not for consumers. Its journey into credit cards and home equity lines came later, and it happened because prime had four properties a variable-rate consumer contract needs: it is published, it is stable, it moves in tidy increments, and it is outside the control of any single lender. Regulation Z cares about that last one, which we come back to below.
So who actually sets it?
Each bank sets its own. In practice they all set the same one, and they get there by watching the Federal Reserve rather than by watching each other — the mechanism is the next section. But there is no rule, no statute and no regulation compelling any bank to post any particular prime rate. A bank could post 8.00% tomorrow. It would be alone, it would lose commercial customers, and consumer contracts indexed to the published prime would not follow it anyway. The convention holds because it is useful, not because it is enforced.
How prime relates to the federal funds rate
Here is the mechanism, and it is simpler than the reputation.
Eight times a year the Federal Open Market Committee sets a target range for the federal funds rate — the rate at which banks lend reserves to one another overnight. It has been a range rather than a single number since December 2008. As of the Fed's July 2026 Monetary Policy Report the range is 3.50% to 3.75%, where it has sat since the December 2025 cut took effect on 11 December 2025. The effective federal funds rate, which is what banks actually transacted at, printed 3.63% every business day in the week ending 7 August 2026.
Banks then post prime at the top of that range plus three percentage points.
Prime = Upper limit of the federal funds target range + 3.00Today: 3.75 + 3.00 = 6.75%. This is a convention banks converged on, not a rule anyone imposed. It appears in no regulation and binds nobody.
The convention has held at every Fed move since the Federal Reserve began lifting rates off zero in December 2015. Below, the Fed's own published target ranges next to the Fed's own published prime rate. Every pair comes from federalreserve.gov.
| Fed move, effective | Target range | Top of range + 3.00 | Prime posted |
|---|---|---|---|
| 17 Dec 2015 | 0.25–0.50% | 3.50% | 3.50% |
| 20 Dec 2018 | 2.25–2.50% | 5.50% | 5.50% |
| 16 Mar 2020 | 0.00–0.25% | 3.25% | 3.25% |
| 27 Jul 2023 | 5.25–5.50% | 8.50% | 8.50% |
| 19 Dec 2024 | 4.25–4.50% | 7.50% | 7.50% |
| 11 Dec 2025 | 3.50–3.75% | 6.75% | 6.75% |
Six moves across eleven years, four hiking cycles and two cutting cycles, and the arithmetic never once broke. That is why the shorthand is reliable enough to use. It is also why the misunderstanding is so durable: a relationship that has held without exception for a decade looks like a rule, and people reasonably assume somebody wrote it down.
Nobody did. What actually happened is that banks needed a base rate that moved with their own cost of overnight money, and the federal funds target is the cleanest public proxy for that cost. Three points on top is the spread banks settled on for lending short-term to their strongest commercial customers. Because the Fed publishes a range rather than a point, prime keys off the upper limit.
If prime were a Fed rate, the answer to "why did my card rate go up" would end in Washington. It does not. The chain has three separate links: the Fed moved its target, banks moved their posted prime, and your issuer's contract did arithmetic. Only the third link is a relationship you are actually in — which means only the third link has paperwork you can read and a phone number you can call.
Where prime stands, and how to look it up
The prime rate is 6.75%.
That comes from the Federal Reserve's H.15 Selected Interest Rates release dated 10 August 2026, which shows the bank prime loan rate at 6.75% for every business day from 3 to 7 August 2026. The same figure appears in the St. Louis Fed's FRED database as series DPRIME, whose most recent observation is 6 August 2026, updated 7 August 2026. Prime has been at 6.75% since the December 2025 rate cut took effect.
It can change on any day the FOMC announces a decision, so the number above is a snapshot with a date on it, not a fact. Here is how to check it yourself, which takes about thirty seconds.
1. The Federal Reserve H.15 release. federalreserve.gov/releases/h15. Posted every business day at 4:15pm Eastern. Look for the row labeled "Bank prime loan." This is the source; everything else is downstream of it.
2. FRED series DPRIME. fred.stlouisfed.org/series/DPRIME. The same data, charted back to 1955, free, no account. Useful when you want history rather than today.
3. The Wall Street Journal prime rate. This is the index most consumer contracts actually name by title. It is not published by the government and it sits behind a paywall much of the time.
4. Your own cardholder agreement. The only one that governs your account. It names which published prime it uses and the date each cycle on which it reads it.
That last one matters more than it sounds. Two cards indexed to prime can reset on different dates and briefly disagree. The Fed's H.15 tells you what prime is. Your agreement tells you which prime, read on which day, applies to you.
A related figure people confuse with prime
The Fed's primary credit rate — the discount rate, what the Fed itself charges banks that borrow from it directly — is a genuine Fed-set rate, and it is currently 3.75%, effective 11 December 2025. It is not prime, it is not an index for consumer credit, and it does not appear in your card agreement. It sits at the top of the federal funds target range, which is exactly the number prime adds three to.
What actually moves with prime
Prime only matters to you if something you hold names it as an index. Plenty of Americans hold nothing indexed to prime and can read this page as background on how an interest rate gets set. Plenty of others hold three such accounts and have never checked.
Usually indexed to prime
- Variable-rate credit cards. The large majority of general-purpose American credit cards. The CFPB's description is that a variable APR "changes with the index interest rate, such as the prime rate published in the Wall Street Journal."
- Home equity lines of credit. The CFPB notes that HELOCs "usually have adjustable interest rates and the payment will vary depending on the outstanding balance." A HELOC is often the largest prime-indexed balance a household has.
- Business lines of credit and personal lines of credit. This is what prime was designed for in the first place.
- Some private student loans. Private, made by a bank or lender. Not federal loans.
- Some store cards and some construction loans. The contract decides, as always.
Not indexed to prime
- Fixed-rate mortgages. Set at closing and fixed for the term. They are priced off long-term Treasury yields and mortgage-backed securities, not off prime — which is why the 30-year fixed average sat at 6.69% in the week ending 6 August 2026 while prime was 6.75%. A mortgage priced below prime is normal, and it is the fastest proof that prime is not "the best rate available."
- Home equity loans. Different product from a HELOC. The CFPB notes a home equity loan "usually has a fixed interest rate – one that will not change."
- Federal student loans. Fixed for the life of the loan by statute. The Department of Education sets the rate once a year off the high yield of the final 10-year Treasury note auction before 1 June — 6.52% for undergraduates borrowing in the 2026–27 award year. Prime has nothing to do with them.
- Most auto loans and personal loans. Fixed at origination.
- Anything already fixed. A fixed rate you signed does not move when prime moves, in either direction. That is the whole point of it.
Open the rate section of the agreement and look for three words: variable, index and margin. If all three appear, you have a prime-indexed product and the margin is the number that belongs to you. If the document says fixed and names no index, prime is irrelevant to that account. On a credit card this information is in the Schumer box and in the cardholder agreement, and your issuer has to give you a copy on request.
What happens to your card when prime moves
Your card rate is not prime. It is prime plus a number the issuer chose for you — and on a card that combined figure is also your APR, because a card's annual fee sits outside the APR calculation.
Card APR = Prime rate + Your marginThe margin was set when the account was approved and does not change when prime does. It is printed in your cardholder agreement.
When prime rises a quarter point, your APR rises a quarter point. Not more, not less. The margin is untouched. That is the whole mechanism, and it is worth seeing in dollars, because a quarter point sounds like nothing and behaves like nothing until it stops being one quarter point.
You carry $6,000 on a card written at prime + 14.00. Prime is 6.75%, so your APR is 20.75%. The Fed raises its target range a quarter point, banks post prime at 7.00%, and your APR becomes 21.00%.
Fifteen dollars a year. Nobody restructures a household over fifteen dollars, and that is exactly why single moves get ignored.
The problem is that quarter points arrive in convoys. Between April 2022 and August 2023 the monthly average prime rate went from 3.50% to 8.50% — five full percentage points in sixteen months. On that same $6,000 balance, the annual interest cost rose by about $300, and the cardholder did nothing, bought nothing and missed nothing. Since then prime has come back down 1.75 points to 6.75%, returning about $105 a year on the same balance. That is the shape of variable-rate risk: invisible per move, substantial per cycle.
Regulation Z generally requires a card issuer to give you 45 days' written notice before a significant change in account terms, including a rate increase. That requirement does not apply here. Section 1026.9(c)(2)(v)(C) specifically exempts an increase in a variable APR that occurs "according to operation of an index that is not under the control of the creditor and is available to the general public." Prime is precisely such an index. So a prime-indexed card rate can rise with no advance notice at all, and the first you see of it is a statement.
The protection running the other way is real. Section 1026.55 bars a card issuer from raising the APR on an existing account except in a short list of circumstances, and the variable-rate exception is narrow: the rate must vary with an index outside the issuer's control and available to the public, and the increase must be caused by an increase in that index. Your margin cannot quietly widen. The calculation method cannot be changed to manufacture a rise. If prime did not move, a variable rate has no business moving.
The check anyone can run in two minutes
Take the APR on your current statement. Subtract today's prime rate. What is left should be exactly the margin printed in your agreement, and it should be the same number it was last year and the year before. If it is not, that is a specific, answerable question to put to your issuer in writing — and "why is my margin different" is a much harder question for a call center to deflect than "why did my rate go up."
What it does to your payment
Less than people expect, and that is not good news. A credit card minimum payment is typically a small percentage of the balance with a dollar floor, so a rate change often does not move the minimum at all. What changes is the split: more of the same payment goes to interest and less to principal. The number on the bill holds steady while the payoff date slides further away, which is the quietest way a debt gets worse.
What prime has actually done
Prime's history is a readable summary of American monetary policy, because it is monetary policy plus three points. Every figure below is the Federal Reserve's monthly average of the posted bank prime loan rate.
- 3.25%, April 2020 to February 2022. The floor, held for almost two years, matching a federal funds target range of zero to 0.25%. This is the cheapest prime has ever been.
- 3.50% in April 2022, then straight up. By January 2023 the monthly average was 7.50% — four percentage points in nine months, the fastest run in decades.
- 8.50% in August 2023. The peak of the cycle, matching a 5.25–5.50% target range. It then sat at 8.50% for thirteen months, through August 2024.
- Down from September 2024. Three cuts took the monthly average to 7.50% by January 2025, where it held for eight months.
- Three more cuts in autumn 2025. September, October and December, landing prime at 6.75% from January 2026, and it has stayed there through July 2026.
A cardholder carrying $8,000 at prime + 13.00, making payments, never missing one, never borrowing more:
The balance never moved. The borrower never did anything wrong. The annual cost of the identical debt rose by roughly $420 and then gave back about $140, entirely because of decisions made in Washington and rates posted by twenty-five banks. That is what "variable" means when it is written on a contract you signed years earlier.
The number that puts today in perspective
The monthly average prime rate peaked at 20.50% in August 1981, during the Federal Reserve's campaign to break double-digit inflation. It spent most of 1980 and 1981 between 15% and 20%. Today's 6.75% is not a high prime rate by the standard of the series; it is a fairly ordinary one that felt extreme because it arrived quickly after thirteen years of unusually cheap money. Both things can be true, and it is worth knowing which one you are reacting to.
What people get wrong about prime
"The Fed raised my credit card rate." Three separate parties did. The Federal Reserve moved its target range. Commercial banks moved their posted prime. Your issuer's contract performed the addition. This is not pedantry — it tells you who to ask. The Fed will not discuss your account. Your issuer will, and the answer is already written in your agreement.
"Prime is the best rate you can get." It is a base rate for short-term lending to a bank's strongest business customers, and even those borrowers often price at prime plus something. Two things follow. Consumers essentially never receive prime; they receive prime plus a margin, and on credit cards that margin is frequently in double digits. And plenty of consumer loans price below prime: the 30-year fixed mortgage average was 6.69% in the week ending 6 August 2026, under prime's 6.75%, because a house is better collateral than a signature.
"Prime is a market rate." It is a posted rate. Nobody trades it, nobody bids on it, and no auction produces it. That is why it steps in exact quarter points and never drifts, and why it can sit unchanged for eight months while Treasury yields move every single day.
"There is one prime rate." Nearly, but not quite. The Federal Reserve publishes "bank prime loan" in H.15, and the Wall Street Journal publishes a prime rate that is the index most consumer contracts name by title. They track each other closely. Your contract names one specific published source and a specific date on which to read it, and that is the one that governs your account.
"If prime falls, my payment falls." Your interest charge falls. Your minimum payment is usually a percentage of the balance with a floor, so a rate cut on its own may not change what you owe this month at all. It changes how much of that payment reaches the principal, which shows up later as a shorter payoff, not sooner as a smaller bill.
"Prime is set once a month" or "prime is set on a schedule." Prime changes when banks change it, which in practice means on or right after the day an FOMC decision takes effect. The FOMC meets eight times a year on dates published more than a year in advance at federalreserve.gov, and it can also act between meetings, as it did twice in March 2020.
What to watch when prime moves
None of this is a recommendation about what to do with your money. It is a list of the facts a person would want in front of them before deciding anything.
Find out whether you hold anything indexed to it. Cards, HELOC, business or personal line of credit, private student loan. Open the agreements and look for the words variable, index and margin. If nothing you hold is variable, prime is a fact about the economy and not a fact about you.
Find your margin, and write it down. Current APR minus current prime. It is the only part of your rate that is genuinely about you rather than about the Federal Reserve, it does not change, and it is the number to quote if you ever ask for a rate reduction.
Do the annual arithmetic once, in dollars. Balance multiplied by the change in the rate. A quarter point on $6,000 is $15 a year. A quarter point on a $90,000 HELOC is $225. The same headline means very different things across those two accounts, and the percentage will not tell you which situation you are in.
Know the calendar. Eight scheduled FOMC meetings a year, published a year ahead. Prime typically moves on or immediately after the day a decision takes effect, so a scheduled meeting date is roughly a date on which your variable rate could change.
Know that fixed-rate products exist. Personal loans, balance transfers and fixed home equity loans all convert a variable balance into a fixed one, and people move debt between the two forms routinely. Whether that trade is worth making depends on the fee, the new rate, the term and the balance — four numbers this page cannot see. What is worth knowing is simply that the choice exists and that it is an ordinary transaction, not an exotic one.
Prime is 6.75% today, banks post it, the Fed publishes it, and the only part of your rate that is really yours is the margin. Everything else on this page is context for those four facts — and if what you actually wanted was the underlying idea, it lives on the interest rate page.
Frequently asked questions
Does the Federal Reserve set the prime rate?
No. Banks set it. The Federal Reserve publishes it in the H.15 release as the bank prime loan rate, which it defines as the rate posted by a majority of the top twenty-five insured U.S.-chartered commercial banks. What the Fed sets is the target range for the federal funds rate, the rate banks charge each other overnight. Banks then post prime at the top of that range plus three percentage points. Because they have done that at every move since 2015, it looks like the Fed setting prime. It is a convention banks chose.
What is the prime rate right now?
The prime rate is 6.75 percent. That is from the Federal Reserve's H.15 release dated 10 August 2026, which shows 6.75 percent for every business day from 3 to 7 August. The same figure appears in FRED series DPRIME, whose most recent observation is 6 August 2026. Prime has stood at 6.75 percent since the Federal Reserve's December 2025 cut took effect on 11 December 2025. Because it can change on any FOMC decision day, check the H.15 release rather than trusting a number printed on any page, including this one.
Why is the prime rate 3 percentage points above the federal funds rate?
There is no rule requiring it. Banks converged on setting prime at the upper limit of the federal funds target range plus 3.00 percentage points, and that arithmetic has held at every Federal Reserve move since the December 2015 liftoff. The logic is that the federal funds rate approximates what overnight money costs a bank, and three points is the spread banks settled on for short-term lending to their strongest commercial customers. Prime keys off the upper limit rather than a midpoint because the Fed publishes a range, not a single number.
Which of my loans change when the prime rate changes?
Only the ones whose contract names prime as the index. In practice that means most variable-rate credit cards, home equity lines of credit, business and personal lines of credit, and some private student loans. It does not include fixed-rate mortgages, home equity loans, federal student loans, or most auto and personal loans, all of which are fixed when you sign and stay fixed no matter what the Fed does. To know for certain, read the rate section of your agreement and look for the words variable, index and margin.
How soon does my credit card rate change after prime moves?
Your cardholder agreement says, and it usually takes effect at the start of a billing cycle after the change, using prime as published on a date the agreement names. In practice that means one or two statements. Your issuer does not have to warn you first. Regulation Z requires 45 days' written notice for most rate increases but specifically exempts an increase in a variable rate caused by a public index the creditor does not control, and prime is exactly such an index.
Can I get a loan at the prime rate?
Almost certainly not, and prime was never meant for consumers. It is a base rate for short-term lending to a bank's strongest business customers, and even many of those borrowers price at prime plus something. Consumer products indexed to prime always add a margin, and on credit cards that margin is often in double digits. It is also worth knowing prime is not the cheapest rate in the market. In early August 2026 the average 30-year fixed mortgage was 6.69 percent, below prime's 6.75 percent.
Related terms
Where to go next
- See what a prime-indexed balance costs you, and what a quarter point does to it, in the debt payoff calculator — free, no account.
- Check where your balances sit with the credit utilization calculator, then read credit utilization explained.
- Watch the Fed, the yield curve and inflation from live federal data in Markets · Economic.
- Work through debt triage in Stage 2 · Stabilize, then credit itself in Stage 3 · Rebuild.
- Browse every definition in Learn the Lingo.
- Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates, released 10 August 2026 (bank prime loan 6.75% and effective federal funds 3.63% for 3–7 August 2026; footnote 7 definition of the prime rate; Treasury constant maturities).
- Federal Reserve Bank of St. Louis, Bank Prime Loan Rate (DPRIME), latest observation 6 August 2026, and the monthly series (MPRIME) (the historical values quoted on this page, including the 20.50% peak in August 1981).
- Board of Governors of the Federal Reserve System, Open Market Operations — target rate history (every federal funds target range and effective date used in the comparison table).
- Board of Governors of the Federal Reserve System, Implementation Note, 10 December 2025 (target range of 3-1/2 to 3-3/4 percent and primary credit rate of 3.75%, both effective 11 December 2025).
- Board of Governors of the Federal Reserve System, Monetary Policy Report, 10 July 2026 (target range unchanged since the start of 2026).
- Consumer Financial Protection Bureau, Regulation Z § 1026.9(c)(2) (45-day notice requirement and the index exception at (v)(C)).
- Consumer Financial Protection Bureau, Regulation Z § 1026.55 (limits on increasing a credit card APR and the narrow variable-rate exception).
- Consumer Financial Protection Bureau, What is a variable interest rate? and Home equity loan vs. HELOC (prime as the named index; HELOCs carry adjustable rates, home equity loans usually fixed).
- Freddie Mac Primary Mortgage Market Survey, via FRED series MORTGAGE30US (30-year fixed average 6.69%, week ending 6 August 2026 — below prime).
- U.S. Department of Education, Federal Student Aid, Interest Rates for Federal Direct Loans, 1 July 2026 to 30 June 2027 (6.52% undergraduate, fixed for the life of the loan and unrelated to prime).
The figures on this page are checked against the source that publishes them, and dated. Published rates move after the release named above — the linked source always carries the current number. This page explains a term; it does not recommend a product.