Margolin recommends two closed-end funds: ING Prime Rate Trust and Van Kampen Senior Income Trust.
The US bank prime rate remained unchanged in the second half of September at 3.25 percent.
The interest rate is set by the plan and is usually tied to the prime rate.
The U.S. kept the prime rate at around 6% while bringing the federal funds rate to 3%.
Small-business loans track the prime rate--the rate at which banks make loans to their most credit-worthy commercial customers.
Mr. Martin's current interest payment is 2.5% over a prime rate of 3.25%, which yields a 5.75% interest rate.
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They lost it all when the prime rate hit 12% in 1974 and banks called in their condo loans.
But what about small, young companies that can't borrow at the prime rate?
In January 2000, the U.S. Prime Rate was 8.5 percent, according to FedPrimeRate.com.
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Many credit card rates are based in part on the prime rate.
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Because the interest rate varies based on the prime rate, which you would know if you read the fine print.
In the last class are the Van Kampen Senior Loan, Eaton Vance Prime Rate Reserves and Franklin Floating Rate funds.
The interest rates are attractive, usually set at 1% or 2% above the prime rate, which is the rate the best corporate borrowers can expect.
The US bank prime rate set by the Federal Reserve remained unchanged at 3.25 percent, where it has been since January of 2009.
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Those figures look especially stark when measuring the gap between the prime rate the benchmark against which card rates are set and average credit-card rates.
Meanwhile, the Fed is holding the interest rates it controls, the Fed Funds Rate and the U.S. Prime Rate, at record low levels.
And prime rate would clearly be the wrong interest rate to use for Apple cannot lend money out, risk free, at the prime rate.
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The attractive margins on commercial lending (a gaping three-point spread between the prime rate and the Federal Reserve discount rate) don't alter this gloomy picture.
While the amount will not be diversified, it will receive a guaranteed rate of return, which could be an average of prime rate plus 2%.
Still, the vast majority of loans are repaid, and you will pay yourself interest, often at the prime rate plus one percentage point, or 4.25%.
Yes that means taking credit risk, but it also means making loans tied to the prime rate and therefore, loans which adjust with the coming inflation.
The new increase of 2.5 percentage points on Mr. Martin's line will effectively double the spread over the prime rate to 5%, yielding an 8.25% interest rate.
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For instance, the Prime Rate goes off of Fed Funds.
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Comparing variable-rate loans can be tricky because some private student lenders tie rates to the prime rate while others use the one-month or three-month London interbank offered rate, or Libor.
Most of those are tied to the prime rate, so if the prime rate were to increase, then the interest rates on those credit cards will undergo a corresponding increase.
Still, the spike in Hong Kong's interbank rates has raised the possibility that banks in Hong Kong may soon be forced to raise their prime rate if the turbulence continues.
Unlike other interest rate hikes where issuers now have to give you a 45-day notice, when your APR increases due to a hike in the prime rate, that increase can take place immediately.
Users of the ReservePlus loan card pay themselves an interest rate pegged at the prime rate (currently 5%) plus a service fee of from 2.9% to 3.25% of the outstanding balance, which goes to Bent's firm.
Michael Brozzetti of Philadelphia got a letter saying that the spread over the prime rate would jump to 4% from 1.5%, yielding a 7.25% rate come May, according to the notice he got from the bank on March 7.
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