Market Data

What the Bank Prime Loan Rate Is, and Why It Sits at 6.75%

A plain-English guide to the benchmark that prices most factory lines of credit and equipment loans, how it's set, who sets it, and the fixed 3-point gap that ties it to the Fed.

The U.S. bank prime loan rate stood at 6.75% as of Jul 10, 2026, according to Federal Reserve data via FRED, and it is set by convention at 3 percentage points above the top of the Federal Reserve's federal funds target range, which puts that upper bound at 3.75%. If your loan documents say "prime plus," this is the number they mean, and understanding the mechanical 3-point link to the Fed is the fastest way to predict your own borrowing costs.

A benchmark set by convention, not committee

No regulator publishes prime. Each large bank posts its own, and the figure quoted everywhere is the one most major banks agree on, the Wall Street Journal surveys the largest banks and prints the consensus, and the Federal Reserve republishes it in its H.15 release. In practice there is nothing to survey: since the mid-1990s, banks have moved prime in lockstep with the Fed, holding the spread at exactly 3.00 percentage points over the target-range ceiling. When the FOMC moves a quarter-point, banks reprice prime the next business day, in unison. That is why the series looks like a staircase, long flat treads punctuated by quarter-point steps on Fed decision days, and why prime never needs forecasting beyond forecasting the Fed itself. The effective federal funds rate, the market rate the Fed steers, currently sits at 3.62%.

Reading 'prime + margin' on your loan documents

Prime is the base; your margin is the negotiation. A strong mid-size manufacturer might borrow at prime plus 0.5 to 1.5 points; a smaller or more leveraged shop at prime plus 2 to 3. The margin prices your credit risk and is fixed for the life of the facility, prime carries the market risk. Two implications follow. First, competitive energy belongs on the margin, because the base is identical at every bank. Second, every FOMC meeting is a repricing event for your entire floating-rate book, which is why treasurers put the Fed's meeting calendar in the same file as their loan covenants.

Bank prime loan rate, Jul 10, 2026: 6.75%. Has held at 6.75% throughout the archived window, since Jun 10, 2026.

Prime never needs forecasting beyond forecasting the Fed itself, the 3-point spread has not budged in three decades.

The arithmetic on a $250,000 credit line

Take a $250,000 working-capital line at prime plus 1.5. With prime at 6.75%, the all-in rate is 8.25%, which costs about $20,625 a year fully drawn, roughly $1,719 a month. Because the prime component is mechanical, you can decompose any quote instantly: subtract today's 6.75% and whatever remains is the margin the bank is charging for your credit. If that residual looks rich against the 0.5-to-3-point range typical for manufacturers, the quote is negotiable, and now you know exactly which part of it.

Use the working capital tied in WIP calculator to see how much prime-priced cash your shop floor is holding. See what your working capital costs

Published 2026-07-13.