What is the difference between the LIBOR rate and Prime rate?
The LIBOR rate and prime rate are two different ways of computing your APR. Prime Rate: The Prime Rate is the interest rate commercial banks charge their most creditworthy or “prime” customers. Most credit cards use the Prime Rate published in the Wall Street Journal, which is an average of the Prime Rates of the nation’s largest commercial banks. LIBOR: LIBOR stands for “London Interbank Offered Rate” and is the average interest rate offered by a specific group of London banks on U.S. dollar deposits of varied maturities, similar to the Prime Rate. Credit card issuers often use the “one month” LIBOR.
