Average Prime Rate Calculator

The Average Prime Rate is a key interest rate influenced by the federal funds target rate (FFTR). This rate impacts various financial products like loans and credit lines. Below is an overview of the Average Prime Rate formula and calculation process.

Average Prime Rate Formula

\[ \text{APR} = \text{FFTR} + 3\% \]

How to Calculate the Average Prime Rate?

1. Determine the federal funds target rate (FFTR%) – This is the percentage rate set by the Federal Reserve.
2. Use the formula – Add 3% to the FFTR to get the APR.
3. Calculate the APR – Simply input the FFTR into the formula, and the result is the Average Prime Rate.

Example Calculation

If the FFTR is 5%, the Average Prime Rate is:
\[ \text{APR} = 5\% + 3\% = 8\% \]

This calculator provides an easy way to compute the Average Prime Rate, making it useful for financial planning and understanding interest rate environments.