Average Prime Rate Calculator

Calculate Average Prime Rate

What is the Average Prime Rate?

The Average Prime Rate (APR) is calculated by adding 3% to the federal funds target rate. It represents the average interest rate that banks charge their most creditworthy customers. Understanding the APR is crucial for borrowers to gauge the cost of loans and for investors to assess the economic environment.

Formula

The formula to calculate the Average Prime Rate (APR) is:

\[ APR = FFTR + 3\% \]

Where:

Example

Let's say the federal funds target rate is 5.50%. Using the formula:

\[ APR = 5.50 + 3 = 8.50 \]

So, the Average Prime Rate (\( APR \)) is 8.50%.

Extended information about "Average-Prime-Rate-Calculator"

How is the Prime Rate Calculated

Definition: The prime rate is the interest rate that commercial banks charge their most creditworthy customers. It is influenced by the federal funds rate.

Formula: \( \text{Prime Rate} = \text{Federal Funds Rate} + 3\% \)

Example: \( \text{Prime Rate} = 5\% + 3\% \)

Prime Rate Interest Calculator

Definition: This calculator estimates the interest rate based on the prime rate and an additional percentage.

Formula: \( \text{Interest Rate} = \text{Prime Rate} + \text{Additional Percentage} \)

Example: \( \text{Interest Rate} = 8\% + 2\% \)

Current Prime Rate for Real Estate Calculator

Definition: This calculator estimates the interest rate for real estate loans based on the current prime rate and an additional percentage.

Formula: \( \text{Real Estate Interest Rate} = \text{Prime Rate} + \text{Additional Percentage} \)

Example: \( \text{Real Estate Interest Rate} = 7\% + 1.5\% \)