What this blended rate calculator does
This calculator finds your blended rate. You enter two balances and their two rates. The tool then weighs the rates by balance. So you see one rate across both debts. It is the average rate you really pay. The result is shown as a percent.
What a blended rate is
A blended rate is a weighted average rate. It mixes two rates into a single one. The bigger balance pulls the rate its way. So it is not just the midpoint of the two. It shows the true cost of the whole debt. It helps compare a refinance offer.
How it is calculated
The tool multiplies each balance by its rate. It adds those two products together. It then divides by the total balance. So a large balance counts for more. A small balance counts for less. The result is your blended rate.
What the result tells you
The result shows your blended rate. Ten thousand at five and five thousand at eight blends to six percent. A bigger high-rate balance raises it. A bigger low-rate balance lowers it. So it shows your real average rate. It is a straightforward figure.
The two balances
The balances are the amounts you owe. The first and second can be any size. The larger one sways the blended rate more. So these numbers set the weights. Use the current balance on each debt. They are the base of the whole sum. Enter your two balances.
The two rates
The rates are the interest on each debt. The first rate pairs with the first balance. The second rate pairs with the second balance. So each rate is weighted by its balance. Use the annual rate on each debt. Mind that a small balance has less pull. Enter your two rates.
Why balances weight the rate
The blended rate is not a plain average. A simple average ignores how much sits at each rate. A big balance at a low rate drags the blend down. So the size of each balance matters. This is why weighting beats a midpoint. It reflects where your money actually is.
Total balance and interest
The tool also shows your total balance. That is both debts added together. It shows the yearly interest as well. Here that interest is nine hundred dollars. So you see the cost in cash, not just a rate. Use both to plan a payoff.
How to use it
Enter your first balance and rate. Add the second balance and rate. Read the blended rate as a percent. Then try shifting a balance. See how the blend moves. Compare it to a single new rate. Use it to test a consolidation.
The limits of this calculator
Every tool has its limits. It blends just two debts. It uses simple stated rates. It ignores fees and changing balances. It does not handle a payoff schedule. So treat it as a guide. So check the full loan terms.
A final tip
Use this to find your true blended rate. Remember the big balance dominates. Use the current balance on each debt. Compare the blend to a new offer. A lower single rate may save money. Do not forget the fees to switch. A careful check needs the full terms.