The Prime Is Anything but Prime

Many people these days keep an eye on the prime rate the way a baseball fan watches the major league standings. The prime rate, usually defined as the lowest interest rate that banks charge their most creditworthy customers, is no longer just an arcane financial statistic. It has become a subject for TV news commentators and cocktail-party conversations.

Few people actually borrow at prime. Loans to small, well-financed businesses, for instance, usually run from half a percentage point to three points above prime. Consumers who borrow to finance a vacation or pay taxes...

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