Blended Rate FAQs — Variable Rates, Fees, APR & Student Loans

A blended rate is the single weighted average interest rate that represents the combined cost of two or more loans. It is calculated by multiplying each loan's balance by its rate, summing those products, and dividing by the total balance.

A simple average treats every loan equally regardless of size. A blended rate weights each loan by its outstanding balance. For example, a $300,000 loan at 6% and a $10,000 loan at 10% gives a simple average of 8%, but a blended rate of 6.13% — because the larger loan dominates.

Calculate it whenever you want to compare your current aggregate debt cost against a new loan offer: before refinancing, before consolidating debts, when evaluating a cash-out refinance, or when reporting your borrowing cost to an advisor.

No. APR (Annual Percentage Rate) is a regulatory disclosure for a single loan that includes fees and points. Blended rate is a calculation you perform yourself across multiple loans using only stated interest rates. Use APR to evaluate a new loan; use blended rate to understand what you currently pay.

No. The blended rate uses stated interest rates only. For a cost-inclusive comparison, you need the APR on each loan.

Use today's current rate. Variable-rate products like HELOCs and ARMs change periodically — recalculate your blended rate after each rate reset. For stress-testing, run the calculation once with today's rate and once with the rate cap.

Yes. Enter each student loan as a separate line with its balance and rate. Use the Add Debt button to add a row for every loan you hold — there is no row limit, so you never need to group or approximate them.

There is no universal benchmark — it depends on loan types and market conditions. A blended rate below the current 30-year fixed mortgage rate suggests your aggregate cost is reasonable. Significantly above that level signals that consolidation might help.

Multiply each loan's balance by its interest rate, add those products together, then divide by the total balance. Written out, the formula is ((Balance 1 × Rate 1) + (Balance 2 × Rate 2)) ÷ Total Balance, and it extends to any number of loans. For example, $250,000 at 5.5% alongside $50,000 at 8.5% gives ((250,000 × 0.055) + (50,000 × 0.085)) ÷ 300,000 = 6.0%.