JPMorgan, US Bank to raise prime lending rate to 3.75% from 3.5%

Miller: What these banks need are higher rates
Miller: What these banks need are higher rates

BB&T was the first of a slew of banks that announced Wednesday that it would increase its prime rate to 3.75 percent, effective immediately.

JPMorgan Chase, U.S. Bank, Citi, HSBC, PNC, SunTrust and BMO Harris also announced they would raise their prime lending rate to 3.75 percent, effective Thursday. Bank of America raised its prime lending rate to 3.75 percent, effective immediately.

The prime rate is the rate at which individual banks lend to their most creditworthy customers, including large corporations. It is often used as a benchmark for other loans like credit card and small-business loans. The bank announced the change after a decision from the Federal Reserve to hike interest rates for the second time in a decade.

The Federal Open Market Committee on Wednesday raised its target range from 0.25 percent to 0.5 percent to 0.5 percent to 0.75 percent. The overnight funds rate currently sits at 0.41 percent. The committee also approved a quarter-point increase in the discount, or primary credit, rate, from 1 percent to 1.25 percent.

The Federal Reserve has no direct influence on the prime rate, but the central bank does set the target federal funds rate, to which the prime rate tends to be closely correlated.

Raising the short-term borrowing costs for banks can prod them to increase certain other rates. Lending out at slightly higher rates could give a small boost to bank earnings in the coming quarters.

The S&P Bank ETF dipped about half a percent after the Fed's decision was released, despite a brief surge immediately after the decision.

Variable rate credit cards and adjustable rate mortgages could be affected from the Fed's December rate move, experts told CNBC. Still, a quarter-point rate hike has an almost inconsequential impact on the monthly budget of the average consumer.

The rates that most people pay for auto loans or college tuition, and the yields on savings accounts, aren't expected to jump right away, as the Fed's benchmark interest rate has limited influence on those things.

After years of the easiest monetary policy in U.S. history, the Fed in December 2015 approved a quarter-point increase in its target federal funds rate. After that, banks like Wells Fargo raised their prime rate to 3.5 percent. It had been at 3.25 percent since 2008, according to the Federal Reserve's weekly surveys of the 25 largest banks.

North Carolina-based BB&T and Minneapolis-based U.S. Bancorp are among the largest financial services companies in the U.S.

— The Associated Press and Reuters contributed to this report, along with CNBC's Jeff Cox and Jessica Dickler