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Blended Interest Rate
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⚠️ Disclaimer: This calculator provides educational estimates only. Blended rate does not account for loan terms, compounding differences, or fees. Consult a financial advisor before making refinancing or consolidation decisions.
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Sources & Methodology
Blended rate formula verified against standard weighted average interest rate methodology.
Investopedia — Weighted Average Interest Rate
investopedia.com — Weighted average methodology applied to multiple debt interest rates.
CFPB — Understanding Your Loan Costs
consumerfinance.gov — CFPB guidance on comparing loan rates and refinancing decisions.
Formula: Blended Rate = ∑(Balancei × Ratei) ÷ ∑(Balancei)
Each loan's contribution to the blended rate is weighted by its balance relative to the total debt. A $200,000 loan at 6.5% has far more impact than a $5,000 loan at 20%.
Each loan's contribution to the blended rate is weighted by its balance relative to the total debt. A $200,000 loan at 6.5% has far more impact than a $5,000 loan at 20%.
Last reviewed: April 2026
How to Calculate Your Blended Interest Rate
A blended rate (also called a weighted average interest rate) gives you a single percentage that represents your combined borrowing cost across all loans and debts. Unlike a simple average that treats all loans equally, the blended rate weights each loan by its balance — so a $200,000 mortgage has far more influence than a $5,000 car loan.
Blended Rate Formula
Blended Rate = ∑(Balance × Rate) ÷ Total Balance
Example: Mortgage $200,000 at 6.5%, Credit card $8,000 at 22.99%, Car loan $15,000 at 7.9%
Weighted sum = ($200,000 × 0.065) + ($8,000 × 0.2299) + ($15,000 × 0.079)
= $13,000 + $1,839 + $1,185 = $16,024
Total balance = $223,000
Blended rate = $16,024 ÷ $223,000 = 7.18%
Weighted sum = ($200,000 × 0.065) + ($8,000 × 0.2299) + ($15,000 × 0.079)
= $13,000 + $1,839 + $1,185 = $16,024
Total balance = $223,000
Blended rate = $16,024 ÷ $223,000 = 7.18%
Why Blended Rate Matters for Refinancing
| Scenario | Total Debt | Blended Rate | Action Insight |
|---|---|---|---|
| Mortgage + high-rate CC | $250,000 | 9.2% | Cash-out refi at 7% saves money |
| Two mortgages | $350,000 | 6.8% | Compare to single loan rate |
| Student + personal loan | $45,000 | 11.4% | Consolidation at 10% saves money |
| Mortgage only | $300,000 | 6.5% | No additional debt burden |
Using Blended Rate to Decide Whether to Consolidate
If a consolidation loan or cash-out refinance offers a rate below your blended rate, you save money by consolidating. If the new rate is above your blended rate, consolidating costs more even if it simplifies payments. Your blended rate is the breakeven benchmark — any consolidation below it is mathematically beneficial.
Important Limitation: Loan Terms Matter Too
Blended rate does not account for loan terms. If you have a 2-year car loan at 7.9% and a 25-year mortgage at 6.5%, the blended rate treats them equivalently by balance. But extending a short-term debt into a 25-year mortgage at a slightly lower rate can cost significantly more in total interest. Always compare total interest paid, not just rates.
💡 Pro Tip: When evaluating a cash-out refinance to pay off credit card debt, compare the new mortgage rate to your blended rate including the credit cards. If your blended rate is 14% and a cash-out refi offers 7.5%, the math strongly favors consolidation — but only if you commit to not running up the cards again.
Frequently Asked Questions
A blended interest rate is the weighted average of all your loans and debts, taking into account how large each balance is. It gives you a single rate that represents your overall borrowing cost. Larger balances have more influence on the blended rate than smaller ones.
Multiply each loan balance by its interest rate, sum all those products, then divide by the total balance of all loans. Example: ($100,000 x 6%) + ($50,000 x 8%) = $6,000 + $4,000 = $10,000. Total balance = $150,000. Blended rate = $10,000 / $150,000 = 6.67%.
A simple average treats all loans equally regardless of size. A blended rate weights each loan by its balance. If you have a $200,000 mortgage at 6% and a $5,000 credit card at 25%, the simple average is 15.5% — but the blended rate is 6.7% because the mortgage dominates.
Use it when deciding whether to refinance multiple debts into one loan, evaluating a cash-out refinance, comparing your current debt cost to a consolidation offer, or simply wanting to understand your total debt burden as a single rate.
No. If a consolidation loan charges more than your blended rate, you pay more in interest even though payments are simplified. Only consolidate when the new rate is meaningfully lower than your blended rate, and factor in any origination fees.
Yes. If you have multiple federal student loans at different rates, calculating your blended rate shows your effective average. The Department of Education uses a blended rate to set interest rates for Direct Consolidation Loans.
Include all interest-bearing debts: mortgages, home equity loans, car loans, student loans, personal loans, and credit card balances. Do not include 0% APR debts or debts you plan to pay off within the next 30 days.
It is a starting point. If your blended rate including credit cards is 15% and a cash-out refi offers 7.5%, the rate comparison favors refinancing. But also factor in closing costs (typically 2-3% of the new loan amount) and whether you will extend short-term debts over a 30-year mortgage term.
The calculator is accurate for the inputs you provide. The formula is mathematically precise. However, it does not account for different loan terms, compounding differences, fees, or tax considerations. Use the blended rate as a comparison benchmark, not a definitive answer.
Yes, significantly. Paying off a $10,000 credit card at 22.99% has a much larger impact on your blended rate than paying off a $10,000 car loan at 6%. Target high-rate debts first (debt avalanche method) to reduce your blended rate fastest.
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