General Information
The Primary and Secondary Credit Programs
Last Updated: 12.01.2025
Primary Credit
Primary Credit is a lending program that serves as the principal safety valve for ensuring adequate liquidity in the banking system. Primary credit is available to depository institutions in generally sound financial condition, as described in the ‘Eligibility’ section below. Primary credit advances are available on an overnight basis, or may be requested for a period up to 90 days in accordance with the Notice of Availability of Term Advances and Applicable Terms. Advances accrue interest at a rate relative to the Federal Open Market Committee’s (FOMC) target rate range of the federal funds rate. Current rates can be found on the Discount Rates page. Depository institutions are ordinarily asked to provide only the minimum information necessary to process an advance, usually the amount and term. Depository institutions are not required to seek alternative sources of funds before requesting primary credit advances. Primary credit advances may be used for any purpose, including financing the sale of federal funds. By making funds readily available at the primary credit rate, the primary credit program complements open market operations in the implementation of monetary policy.
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Secondary Credit
Secondary Credit is a lending program that may be available to depository institutions that are not eligible for primary credit. The secondary credit program entails a higher level of administration and oversight than the primary credit program. It is extended on a very short-term basis, typically overnight, at a rate that is above the primary credit rate. Current rates can be found on the Discount Rates page. Secondary credit is available to meet backup liquidity needs when its use is consistent with a timely return by a depository institution to a reliance on market sources of funding or the orderly resolution of a troubled depository institution. Secondary credit may not be used to fund an expansion of the borrower's assets. A Reserve Bank must have sufficient information about a borrower's financial condition and reasons for borrowing to ensure that an extension of secondary credit would be consistent with the purpose of the program.
Contact your local Reserve Bank with any questions on the primary and secondary credit programs.
Eligibility
For the primary credit program, Reserve Banks rely on supervisory ratings and capital measures to determine whether an institution is in generally sound financial condition, but Reserve Banks may also consider other information when making this determination. In most cases, an institution must have a CAMELS composite rating of 3 or stronger and a PCA designation of “adequately capitalized” or stronger to be eligible for primary credit.
Depository institutions that do not qualify for primary credit may be eligible for secondary credit when use of such credit is consistent with a timely return to a reliance on market sources of funding or the orderly resolution of a troubled depository institution. Institutions' eligibility for primary credit and secondary credit is reassessed by the Reserve Banks as new information about their condition becomes available, and institutions will be notified promptly if their eligibility changes. Contact your local Reserve Bank with any questions on specific eligibility criteria.
Summary Table
| Feature | Primary Credit | Secondary Credit |
|---|---|---|
| Rate | Rate relative to the FOMC's target range of the federal funds rate | Primary credit rate plus 50 basis points |
| Term | Up to 90 days | Short-term, typically overnight |
| Eligibility | Depository institutions in generally sound financial condition | Depository institutions that do not qualify for primary credit. |
| Use | Generally no restrictions on use of funds | As a backup source of funding on a very short-term basis, or to facilitate an orderly resolution of serious financial difficulties |
| Administration | Ordinarily no questions asked | Reserve Banks will collect information necessary to confirm that borrowing is consistent with the objectives of the program. |