The prime rate is a benchmark lending rate which is used by major banks (primarily) to determine what each of them will pay each other to cover any shortfalls from the day before. If I lend on a few more mortgages than I have deposits to cover it, I borrow from this pool to balance my books for the day.
Anyway, many loans that you may have had could have been based on the prime rate plus a number assigned to you about your borrower status. It makes your interest rate some number higher than prime, and as prime adjusts, so does your rate.
Usually these are "unsecured" debts. A mortgage would not be included as you'd have a specific fixed rate assigned to your balance. A HELOC or a credit card would be included as they are "unsecured" or not tied to a specific asset the bank could repossess.
They're also often referred to as "variable rate loans". Your HELOC, for example, is great right now at 4% interest, but things would not be so great if that was costing 10%. That can't happen with a fully fixed and amortized mortgage. It can happen with an ARM or anything with a balloon payment.
If you're interested, we should talk a bit (for free). I specialize in education and collaboration that includes the professional financial stuff done without the high cost. And I give customers the same professional tools that are usually limited to the yacht-owner crowd. Let me know!
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