Discount Rate

The fully secured interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank. There are three discount programs: primary credit (the term “discount rate” usually refers to the primary credit rate since it is the main program), secondary credit, and seasonal credit, each with its own interest rate. Discount rates are established by each Reserve Bank’s Board of Directors, subject to the review and determination of the Board of Governors. The rates for the three lending programs are the same across all Reserve Banks except on days around a change in the rate.