Although the prime rate is the rate that U.S. banks charge their most credit-worthy customers, the prime rate is normally higher than the London Interbank Offered Rate (LIBOR).

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The prime rate is typically higher than the LIBOR because it reflects the credit risk and operational costs of lending to consumers, whereas LIBOR is an average of interest rates estimated by leading banks in London that they would be charged if borrowing from other banks, representing interbank lending rates which are usually lower.

Although the Prime Rate Is the Rate That U