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When Kilgore became the paper’s managing editor in 1941, he brought a vision for a publication that was about more than the rises and falls of the stock market. He encouraged reporters to produce “situation stories,” which went beyond telling people what had happened in the news to explaining why it had happened. Kilgore led the paper until his death in 1967 and oversaw huge growth in the paper’s influence and profitability. Generally, the prime rate tends to be three points higher than the federal funds rate, causing a sort of trickle-down effect for borrowers. The more expensive it is for banks to borrow money, the more expensive it will become for customers to borrow money from the banks.
Therefore borrowers with a higher credit score can receive a lower margin while borrowers with a lower credit score will receive a higher margin. In a variable rate credit product, the margin remains the same over the life of the loan; however, the variable rate is adjusted when there is a change in the underlying indexed rate. Many borrowers and investors alike also use the Wall Street Journal’s prime rate as a sort of economic indicator.
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When rates rise, lenders may tighten their lending standards, making it harder for individuals to qualify for loans. This is especially tough for first-time homebuyers or those with lower credit scores, who may find themselves facing increased scrutiny in their loan applications. Donald Trump has not kept the newsroom from reporting aggressively about the president.
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The prime rate only changes when at least 7 of the 10 banks surveyed raise or lower their rates. At that point, the WSJ will calculate and publish a new prime rate both in print and on their website’s market page. You don’t need to monitor the WSJ Prime Rate every day, but broke millennial tips depending on your financial goals, you might want to pay attention to the prime rate and its recent trends. If you want to pay off credit card debt, you should be aware of what interest rate you’re paying on that debt.
What Should You Do When the WSJ Prime Rate Changes?
You might not realize this, but the WSJ Prime Rate isn’t just some abstract number tossed around by economists. Typically, this rate aligns with the top rates offered by U.S. banks to their most creditworthy customers. If you ever wondered about the financial health of some celebrities, check out if Greg Gutfeld is married; after all, personal finance often plays a role in public lives! A shift in the WSJ Prime Rate can signal changes in borrowing costs, making it vital for homeowners, small businesses, and anyone looking to make large purchases. For one example of a prime rate’s influence, consider a Bank of America credit card borrower with a credit card balance that is subject to a variable annual percentage rate.
- If a borrower has a variable rate loan or credit card, the terms of the variable rate changes will be disclosed in their credit agreement.
- To truly understand how the WSJ Prime Rate impacts your loan costs, it’s important to grasp its role in the financial landscape.
- If the prime rate goes down, that means that it’s becoming cheaper to borrow money.
- Understanding how the WSJ Prime Rate drives lending criteria can empower borrowers to strategize better, ensuring they’re well-prepared when applying for a loan.
- The WSJ Prime Rate is essentially the base interest rate that banks are charging borrowers, and it’s referenced by lenders and borrowers alike.
Understanding the Wall Street Journal Prime Rate
If you have some cash savings in the bank, you might want to look for a higher-yielding savings account. The overall “cost of money” and your costs of borrowing (or your yield as a saver and investor) are affected by the prime rate. The prime rate is the interest rate that commercial banks charge to their most creditworthy customers. The federal funds overnight rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates. The WSJ prime rate is one of the market’s leading sources for comprehensive average prime rate reporting. The WSJ prime rate gets its name from The Wall Street Journal’s practice of polling the 10 largest U.S. banks to see what their prime lending rate is.
When seven or more of the 10 banks polled change their prime rate, The Wall Street Journal publishes a new prime rate. If you’re considering a personal loan, understanding the connection between the WSJ Prime Rate and your interest rate could save you big bucks. For instance, a lender like Marcus by Goldman Sachs may have rates that rise when the prime rate does. If you need to consolidate debt or finance a major purchase, these shifts can significantly impact your overall loan costs.
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This eventually leads to higher stock prices for leading companies, and many investors want to position themselves to get in on the action as early as possible. So, before tapping into that home equity, make sure you understand how changes in the prime rate might alter your repayment terms. The Journal’s newsroom has been rocked by the tragedy that sometimes accompanies world-class journalism.
In a nutshell, as the WSJ Prime Rate rises or falls, so do your loan costs. This can create a ripple effect, influencing everything from your mortgage payments to the interest rates on your credit cards. Therefore, keeping an eye on this key indicator can empower you to make informed financial choices.
Depending on your investing style, it may make for a good time to “buy the dip” if you can get a good deal on the stock of a well-established company whose shares are experiencing a price slide. Just be prepared to ride out the economic rut, as shares may dip or move sideways until things begin to even out. The implications of the WSJ Prime Rate extend well beyond just your monthly payments.
- Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
- Many variable accounts will state that your variable APR is a certain percentage above the prime rate.
- Liquidity has a way of drying up when interest rates go up as the economy begins to slow down.
- Because of its roots in covering economic and financial matters, The Journal is often seen as being more conservative in its coverage than other mainstream news outlets.
- Many credit cards, like the Chase Sapphire Preferred, tie their annual percentage rates (APRs) to the prime rate.
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As you can see, the Wall Street Journal’s prime rate can be an interesting tool for your financial arsenal. While there’s no need to check it daily, if you do hear the news that the prime rate has changed, it’s certainly helpful to have an understanding of the implications. If you’re unable to keep up with rising rates, you might even consider refinancing with a debt consolidation loan or looking for a lower-interest balance transfer. Keeping track of shifts in the prime rate isn’t always an easy task, as they don’t tend to happen at predictable intervals. For instance, the prime rate only changed once in all of 2002, but on a nearly monthly basis in 2001. Due to the WSJ’s solid track record of staying on top of the current prime rate, it’s become the go-to source for many borrowers and lenders.
Those offering the best rates would no doubt get most of the business, while those who set their rates too high wouldn’t be likely to last very long. Instead, many financial institutions calculate their rates by combining the U.S. prime rate with various percentages based on perceived borrower risk. Some smaller banks will use a larger bank’s prime as a reference for pricing loans, but most use the Wall Street Journal version.
Reporters and editors managed to put out a paper from a printing plant in New Jersey. For their breaking news coverage of the day, the staff won a Pulitzer Prize. If the prime rate goes down, that means that it’s becoming cheaper to borrow money. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. The tightened lending environment could lead to a scenario where more potential buyers are sidelined, hurting home sales in your area.
That reporting won the paper the 2019 Pulitzer Prize for national reporting. In 2025, under Tucker’s leadership, The Journal published a birthday greeting from Trump to convicted sex trafficker Jeffrey Epstein that featured the silhouette of a naked woman. Before publication, Trump called Tucker try to stop the story from running. When The Journal published the story despite the threat, the president sued the paper for $10 billion. While the Wall Street Journal prime rate may initially sound like a really great subscription deal, it’s actually something else entirely.
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