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US Prime Rate History Changes

March 26, 2012

By MoneyRates Team | Money Rates Columnist

prime rate history

The prime rate is the interest rate benchmark that banks use as their primary lending rate. This rate is often used by banks and mortgage companies as an index to set rates on variable loans and mortgages. Understanding prime rate history is crucial because these rates can have a direct impact on CD rates and savings account interest rates. Banks frequently use the prime rate as a benchmark for variable-rate CDs or money market accounts. Credit card companies also use the prime rate to peg the credit card rates charged to consumers. 

Technically, banks can set their own prime rate to whatever they like. But in reality, banks will change their prime rate when the Federal Reserve makes a change in the target federal funds rate. The nation's prime rate is considered the prime rate charged by a majority of the nation's largest banks. The most common reference for the nation's prime rate is published daily in The Wall Street Journal. 

Current prime rate

The latest prime rate as of August 12, 2016, is 3.5 percent, according to the Board of Governors of the Federal Reserve System.

The Federal Open Market Committee (FOMC) had kept the federal funds rate at a target range of 0-0.25 percent for several years, effectively setting the U.S. prime rate at an average monthly rate of 3.25 percent between January 2009 and November 2015. But rates have increased since then.

Historically, the prime rate is set 300 points above the federal funds rate and resets in tandem with changes to that rate by the Federal Reserve.

Prime rate history

Banks in the United States have used a prime rate that is derived from the nation's federal funds rate since the 1950s. The highest the prime rate was ever recorded in the U.S. was in the early 1980s, when the rate exceeded 20 percent. The changes in the prime rate in the United States since 1988 are detailed in the table below:

Americans in the 1980s and 1990s dealt with a prime rate over 10 percent. Major banks are typically the first to move their prime rate, although nearly every FDIC-insured bank follows within a few days. Check MoneyRates.com for the latest news on the prime rate.

Prime rates from January 2015 to July 2016

Time Period

Prime Rate

7/1/2016 3.50%
6/1/2016 3.50%
5/1/2016 3.50%
4/1/2016 3.50%
3/1/2016 3.50%
2/1/2016 3.50%
1/1/2016 3.50%
12/1/2015 3.37%
11/1/2015 3.25%
10/1/2015 3.25%
9/1/2015 3.25%
8/1/2015 3.25%
7/1/2015 3.25%
6/1/2015 3.25%
5/1/2015 3.25%
4/1/2015 3.25%
3/1/2015 3.25%
2/1/2015 3.25%
1/1/2015 3.25%

Older prime rates

Effective Date
Prime Rate
12-16-08
3.25%
10-29-08
4.00%
10-08-08
4.50%
04-30-08
5.00%
03-18-08
5.25%
01-30-08
6.00%
01-22-08
6.50%
12-11-07
7.25%
10-31-07
7.50%
09-18-07
7.75%
06-29-06
8.25%
05-10-06
8.00%
03-28-06
7.75%
01-31-06
7.50%
12-13-05
7.25%
11-01-05
7.00%
09-20-05
6.75%
08-09-05
6.50%
06-30-05
6.25%
05-03-05
6.00%
03-22-05
5.75%
02-02-05
5.50%
12-14-04
5.25%
11-10-04
5.00%
09-21-04
4.75%
08-10-04
4.50%
06-30-04
4.25%
06-27-03
4.00%
11-07-02
4.25%
12-12-01
4.75%
11-07-01
5.00%
10-03-01
5.50%
09-17-01
6.00%
08-22-01
6.50%
06-28-01
6.75%
05-16-01
7.00%
04-19-01
7.50%
03-21-01
8.00%
03-21-01
8.00%
02-01-01
8.50%
01-04-01
9.00%
05-17-00
9.50%
03-22-00
9.00%
02-03-00
8.75%
11-17-99
8.50%
08-25-99
8.25%
07-01-99
8.00%
11-18-98
7.75%
10-16-98
8.00%
09-30-98
8.25%
03-26-97
8.50%
01-31-96
8.25%
12-20-95
8.50%
07-07-95
8.75%
02-01-95
9.00%
11-15-94
8.50%
08-16-94
7.75%
05-17-94
7.25%
04-19-94
6.75%
03-23-94
6.25%
07-02-92
6.00%
12-31-91
6.50%
11-06-91
7.50%
09-13-91
8.00%
05-01-91
8.50%
02-01-91
9.00%
02-01-91
9.00%
12-20-90
9.50%
01-08-90
10.00%
07-31-89
10.50%
06-05-89
11.00%
02-24-89
11.50%
02-10-89
11.00%
11-28-88
10.50%
08-11-88
10.00%
07-14-88
9.50%
05-11-88
9.00%
02-02-88
8.50%

To see the impact the prime rate has on savings account rates, visit the savings accounts page.

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