Finance

Instant, private, and free

Blended Rate Calculator.

Calculate a weighted blended rate from amounts and their corresponding rates.

On-device calculationNo signup
01

Set your values

Results update as you type.

Blended annual rate: 8.000%

Blended annual rate

0.000%

FAQs

Why is a blended rate weighted?

Each rate contributes according to its associated amount; a simple average would misstate the combined rate when amounts differ.

Use Cases

Refinancing Decision

Determine the combined interest rate of two existing loans to compare with a potential refinancing offer. If the new loan's rate is lower than the blended rate, refinancing may save money.

Example: Loan A: $20,000 at 6%, Loan B: $10,000 at 8% → blended rate = 6.67%

Investment Portfolio Analysis

Calculate the weighted average return of two investments to assess overall portfolio performance. This helps in balancing risk and return.

Example: Investment X: $5,000 at 4%, Investment Y: $15,000 at 6% → blended return = 5.5%

Frequently Asked Questions

What is a blended rate?
A blended rate is the weighted average of two or more interest rates, where each rate is weighted by the outstanding balance or principal amount. It gives a single effective rate that reflects the overall cost or return across multiple sources.
How do I calculate the blended rate for two loans?
Multiply each loan's balance by its interest rate, sum these products, then divide by the total balance of both loans. The result is the blended rate. For example, a $10,000 loan at 5% and a $5,000 loan at 7% gives a blended rate of (10,000*0.05 + 5,000*0.07) / 15,000 = 5.67%.
Why is a blended rate useful?
It simplifies comparison and decision-making by providing a single rate that represents the average cost of multiple debts or the average return of multiple investments. This helps in evaluating refinancing options or portfolio performance.

Tips & Common Mistakes

Tips

  • Ensure both balances are in the same currency and both rates are in the same format (e.g., both as percentages or decimals).
  • Use the outstanding balance, not the original loan amount, for accurate weighting.
  • Double-check your inputs: a small error in balance or rate can significantly affect the blended rate.
  • For more than two sources, you can extend the same formula by adding each product and dividing by the total balance.

Common Mistakes to Avoid

  • Using the original loan amounts instead of current outstanding balances, which skews the weighted average.
  • Mixing percentage and decimal forms (e.g., using 5% as 5 instead of 0.05) without converting consistently.
  • Forgetting to divide by the total balance, leading to an incorrect sum of weighted rates.

Last updated: August 13, 2026