The Prime Rate, Read From Your Card Agreement

What prime is and who sets it

The prime rate is not set by the government. Each bank posts its own. The figure you see quoted comes from the Federal Reserve's H.15 release, which reports the rate posted by a majority of the 25 largest insured US-chartered commercial banks. The H.15 notes call prime one of several base rates banks use to price short-term business loans; for consumers, it is the base for most variable-rate credit.

In the H.15 release of November 10, 2026, prime was 7.00% on November 9. It has not changed since the increase that took effect on September 17, 2026.

Why it sits three points above the Fed

Large banks have set prime at the top of the federal funds target range plus three points for decades. No law requires the three points; it is a convention, and it has held through every move since 2020. When the Fed changes its range, the big banks announce a new prime, usually effective the next business day after the decision.

Prime since 2020

The daily H.15 series, published on FRED, shows how far prime can travel in a few years. These are the main points since 2020.

From 3.25% to 8.50% is a rise of 5.25 points in less than a year and a half. Anyone carrying a variable-rate balance through that period saw the APR on it rise by the same amount.

Which loans use prime plus a margin

• Credit cards. Most card APRs are variable: prime plus a margin set by your credit when the account opened. The margin usually stays put; prime moves.
• Home equity lines of credit. Many HELOCs charge prime plus or minus a margin during the draw period. Compare one with a fixed loan in personal loan vs. HELOC.
• Some personal lines of credit and small business loans. Banks often tie these to prime as well.
• Not most personal loans. A typical personal loan has a fixed APR set when you sign. Prime affects only what lenders charge new borrowers, and only partly.

That split matters if you are choosing between revolving credit and a loan. A card balance at prime plus a margin is exposed to every Fed move until you pay it off. A fixed-rate loan locks the rate for the term.

Reading "prime + margin" in a card agreement

Regulation Z, the federal rule that carries out the Truth in Lending Act, sets what a card issuer must tell you about a variable rate at account opening. The disclosure must say that the APR may increase, how the rate is determined including the margin, when and how often it can change, any limit on the change, and what an increase does.

• Find the index. The rate table you received at account opening names what the APR follows; for most cards it is prime.
• Find the margin. Your cardholder agreement shows the points added to the index. Subtract today's 7.00% prime from your current APR to check it.
• Note the timing. The agreement says which day's index value is used and how often the rate can change, so you know when a Fed move will show up.
• Look for a separate rate. Cash advances and penalty rates often carry their own, higher margins.

What prime says about a personal loan offer

Prime is useful as a yardstick even for a fixed-rate loan. The Federal Reserve's G.19 survey put the average 24-month personal loan at commercial banks at 11.90% APR in the third quarter of 2026. That survey looks at the first week of August, when prime was still 6.75%, so the average sat about five points above prime. The gap is the lender's charge for expected losses, its costs and its margin.

When you hold an offer, set it against both numbers. An APR near the bank average is in line with what banks charge borrowers with strong credit. An APR twice the bank average says more about your credit file, the term or the fee than about the Fed. A quarter-point move in prime changes a new $10,000, 36-month offer by about $1.20 a month if the lender passes it through in full, and lenders do not always pass a move through quickly.

The reverse also holds. Waiting for prime to fall before you borrow rarely pays if you carry card debt in the meantime, because the card charges prime plus its margin every month you wait. The numbers are in borrow now or wait.

A worked example: one card, two rate moves

Take a card priced at prime + 15.49 points with a steady $5,000 balance. Interest here is charged monthly at APR ÷ 12; real cards use a daily rate, which changes the result by cents.

The September 2026 quarter point added about $1.04 a month, or $12.50 a year. The 2022–2023 rise added about $21.88 a month, or $262.50 a year, on the same balance. The margin, not prime, is the larger part of the APR, and it is the part a lower-rate loan can replace. See personal loan vs. credit card and the loan vs. card calculator.

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