1. What is the Blended Rate?

The blended rate is a weighted average interest rate that takes into account different interest rates applied to different balances in savings accounts or investments. It provides a single rate that represents the overall return across all your accounts.

2. How Does the Calculator Work?

The calculator uses the blended rate formula:

Where:

• \( \text{Balance}_i \) — Individual account balance (USD)
• \( \text{Rate}_i \) — Interest rate for corresponding account (decimal)
• \( \text{Total Balance} \) — Sum of all account balances (USD)

Explanation: The equation calculates the weighted average of interest rates based on the proportion each balance contributes to the total.

3. Importance of Blended Rate Calculation

Details: Knowing your blended rate helps you understand your true return across multiple accounts, compare different savings strategies, and make informed decisions about where to allocate funds.

4. Using the Calculator

Tips: Enter balances and corresponding rates as comma-separated values. For example: "1000,2000,3000" and "0.01,0.02,0.015". The number of balances must match the number of rates.

5. Frequently Asked Questions (FAQ)

Q1: Why use a blended rate instead of simple average?
A: Blended rate accounts for the different amounts in each account, giving a more accurate picture of your overall return.

Q2: What are typical blended rate ranges?
A: For savings accounts, blended rates typically range from 0.5% to 4% depending on account types and current interest rates.

Q3: Can I use this for loan rates?
A: Yes, the same principle applies to calculate the average interest rate across multiple loans.

Q4: How often should I calculate my blended rate?
A: Recalculate whenever you open/close accounts, change balances significantly, or when interest rates change.

Q5: Does this account for compounding?
A: This calculates the simple blended rate. For compounding effects, you would need a more complex calculation.