Big Banks Trim Loan Rates : Finance: Following lead of the Federal Reserve Board, they cut prime rates to 8.75% from 9%.

Most of the nation’s largest banks Friday cut their prime lending rates to 8.75% from 9% following the Federal Reserve Board’s decision a day earlier to reduce key interest rates.

New York-based Citicorp, the nation’s largest banking company, said it cut its prime rate, as did many other leading banks around the country, including First Interstate Bank and Wells Fargo Bank in California.

A few banks, including Bank of America, cut rates Thursday.

The prime rate is the base upon which banks compute interest charges on a wide variety of consumer and business loans. Credit card interest rates, for example, typically are a set number of percentage points above the prime rate.

The cuts--the first reduction in prime lending rates since October, 1993--came after the Fed reduced the federal funds rate by a quarter of a percentage point to 5.75%.

The federal funds rate is the interest on overnight loans between banks.

The lower rates will mean a small but immediate boost for the U.S. economy, as consumers and businesses spend less paying off credit card, home equity and other loans.

A quarter of a point won’t make a huge difference when it comes to consumer spending, economists said. The average credit card holder, for example, would save about $4 a year in interest.

But the cut is expected to help revive consumer confidence, which has flagged as the economy slowed in the first half of 1995.