The prime rate is the interest rate that big US banks use as a base for many consumer and business loans, and it typically sits 3 percentage points above the top of the Fed funds target range.
Banks set their own prime rate, but in practice they move it in lockstep with the Fed. Credit cards and home equity lines of credit are often priced as 'prime plus' a margin.
Why it matters to you
When the Fed changes rates, your credit card APR usually changes within one or two billing cycles because of the prime rate.