Breaking: The U.S. prime rate holds at 7.00% today. That is despite the Federal Reserve’s quarter point cut to the federal funds rate on December 10. I am not seeing any bank move on prime yet. The window for change is open, and the clock has started for borrowers and savers.
Prime rate right now: 7.00%. Banks have not posted a change. A move to 6.75% is widely expected, but timing is up to each lender.
What changed today
The Fed lowered its benchmark rate by 25 basis points to a 3.50% to 3.75% target range. Prime usually sits about three points above that policy rate. That is why markets expect banks to trim their prime to 6.75%. It rarely happens on the same day. Lenders update when their funding costs and pricing committees line up.
Here is the key detail for your wallet. Credit cards, home equity lines, and many business loans are tied to prime. When prime drops, those rates drop by the same amount, margin unchanged. But the relief hits with your next billing cycle, not at midnight.
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Why the prime rate matters now
Prime is the reference price for a huge slice of American borrowing. Every quarter point counts when balances are large or terms are long. A move to 6.75% would pull down rates on variable loans across the board. That would free up cash flow for households and working capital for firms. It would also pressure deposit yields, since banks often lower savings rates after they trim lending benchmarks.
Markets are already adjusting. Bond yields tend to soften after a Fed cut, which lifts bond prices. Rate‑sensitive stocks, like utilities and real estate, often catch a bid when borrowing costs ease. Banks face mixed math. Lower prime can compress net interest margins, but falling defaults and stronger loan demand can soften the blow. Small caps can benefit from cheaper credit, while high dividend names look steadier as cash yields drift down.
A slower path from the Fed matters too. Policymakers signaled a cautious stance for 2026, with only limited easing on the table. That suggests a glide, not a dive, in borrowing costs. Plan for gradual adjustments, not a straight line.
How and when banks move
Each bank sets its own published prime. Most large lenders move together, but there is no rule that forces it. The usual pattern is a notice within a few days of a Fed action. Some wait for month end, some align with billing cycles. Your product terms control the timing.
Here is how it typically plays out. The bank posts a new prime. Variable rates tied to prime adjust by the same amount. Cards reflect the change on the next statement. Home equity lines adjust on their set schedule, often monthly. Business credit lines can change faster, sometimes the next day, depending on your agreement.
Do not assume your APR updated today. Check your account terms and watch for the official prime notice from your bank.
What to do right now
If you borrow on variable rates, you have choices. If you save, you do too. Move early. The first movers usually get the best terms.
- Call your card issuer and ask for a lower margin. Pair that with on‑time payments.
- Line up a HELOC or business line now. Rate floors and fees can rise if you wait.
- Refinance high rate debt to a fixed loan if you need budget certainty.
- Lock in longer CD terms if the yield suits your plan, and keep a cash buffer flexible.
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If your card APR is prime plus 15, and prime drops 0.25, your APR drops by 0.25. That change shows on your next statement.
For investors, think about duration and quality. If you expect more easing, longer bonds can gain more, though they swing more. Investment grade credit looks supported if growth holds. For stocks, focus on balance sheets that improve when rates fall. Companies with heavy interest costs stand to gain. Lenders with strong deposit franchises can defend margins better.
Frequently Asked Questions
Q: What is the prime rate?
A: It is a benchmark many banks use to price loans. Cards, HELOCs, and some business loans are often set at prime plus a margin.
Q: Why did prime not change when the Fed cut?
A: Banks decide when to adjust their prime. They often move within days, but there is no set rule or schedule.
Q: When will my credit card APR drop?
A: After your bank publishes a lower prime, your variable APR should update on the next statement, margin unchanged.
Q: Will savings rates fall too?
A: Likely. Banks tend to lower deposit yields as their lending benchmarks drop, though the pace varies by bank and account type.
Q: Should I refinance now or wait?
A: If you can cut your rate and costs today, act. If your rate is already low, you can wait for banks to post the new prime, then compare again.
A lower prime is coming into view, but not in place yet. Borrowers should prepare files, ask for better margins, and lock savings where it makes sense. I will report the moment banks post changes. Until then, position yourself to move first.
