The Federal Reserve's discount rate is the interest rate charged to member banks when they borrow money from the Fed's discount window. The prime rate is the interest rate charged by banks to their most valuable customers. The prime rate is also used as a standard for other types of loans, such as credit cards and auto loans. The prime rate is set by each individual bank, not by the Federal Reserve. The prime rate, on the other hand, is influenced by the federal funds rate, which is set by the Federal Reserve.