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Debt consolidation · rate comparison
Debt consolidation comparison by weighted-average rate
Blend several debt balances and rates into one weighted-average rate and compare it with a proposed consolidation rate to see which way the offer points.
Verified engine
What the engine returns
The blended rate is what the pile pays today, weighted by where the money actually sits. The differential is the gap to the offer, with a positive figure favouring consolidation. Read its size, not just its sign — a sliver of advantage is easily consumed by an origination fee or a stretched repayment term.
Inputs the result is built from
First debt balance
First debt rate
Second debt balance
Second debt rate
Third debt balance
Third debt rate
Proposed consolidation rate
How the result is derived
MethodEach balance multiplied by its rate, the products summed and divided by the total balance, gives the weighted-average rate; the offered consolidation rate subtracted from it gives the differential, with a positive figure favouring the offer.
StandardBalance-weighted average rate comparison for debt consolidation
GuardA pile with no positive balance is refused — with nothing owed, the weighted average would divide by nothing and describe nothing.
How the offer stacks against the rate you already pay
What one blended rate can say about several debts
Weighting is the substance of the comparison. A small balance at a terrible rate moves the average far less than a large balance at a middling one, because each rate counts in proportion to the money actually sitting at it. The blended figure is the interest cost of the whole pile per unit of the whole balance — what the debts pay as if they were one.
The differential reads the offer against that figure, with a positive value favouring consolidation: the pile currently pays more than the offer would charge. The second and third debts are optional, so a single debt entered alone collapses the comparison to that debt’s rate against the offer — a legitimate degenerate case, not a misuse.
What rates alone cannot settle is the verdict. Consolidation offers routinely pair a lower rate with a longer term, and a smaller rate collected over more years can cost more in total interest than the debts it replaced — to say nothing of origination fees, which sit entirely outside a rate comparison. The differential names the direction the rates point; whether the deal is cheaper over its life is a separate, full-schedule question.
Blending also erases strategy. Held separately, the debts can be attacked in order of rate, with every spare payment aimed at the worst one; consolidated, that ordering is gone. A household disciplined enough to run that attack can find it competes closely with a mediocre consolidation offer — which is worth knowing before signing one.
Each balance multiplied by its rate, the products summed and divided by the total balance, gives the weighted-average rate; the offered consolidation rate subtracted from it gives the differential, with a positive figure favouring the offer.
When this calculation is used
- Reading a consolidation offer honestly: whether its rate actually beats what the debts blend to today.
- Finding the blended rate a set of cards and loans currently pays, as a single number to negotiate against.
- Seeing how far one high-rate balance drags the average — and whether attacking that balance alone beats consolidating everything.
- Comparing two consolidation offers against the same pile of debts by their differentials.
Worked example
A common pile: a card at a punishing rate, a store balance at a high one and a personal loan at a moderate one, set against a consolidation offer priced below all three.
The blended rate is what the pile pays today, weighted by where the money actually sits. The differential is the gap to the offer, with a positive figure favouring consolidation. Read its size, not just its sign — a sliver of advantage is easily consumed by an origination fee or a stretched repayment term.
Before acting on a favourable differential, put the offer’s actual term through a total-interest check. A lower rate collected over a longer schedule can cost more in the end than the debts it replaced — the one flattery a rate-only comparison cannot catch on its own.
What each input represents
First debt balance
The first debt’s outstanding balance. At least one debt must carry a positive balance for a weighted average to exist at all.
First debt rate
The annual rate the first debt pays. Every rate here is weighted by its own balance, so a rate on a large balance moves the average more than the same rate on a small one.
Second debt balance
A second debt’s balance, optional. Left empty it contributes nothing, and the comparison proceeds over the debts actually entered.
Second debt rate
The second debt’s annual rate. With no second balance it has nothing to weight and no effect on the average.
Third debt balance
A third debt’s balance, optional in the same way. More debts than three can be folded in by stages: blend three, then re-enter their total and its blended rate as a single debt alongside the next ones.
Third debt rate
The third debt’s annual rate, weighted by the third balance exactly as the others are.
Proposed consolidation rate
The single rate the offer proposes for the whole balance — the number the blended average is measured against, and the only input that belongs to the offer rather than to the debts.
Assumptions and limits
- The comparison is between rates only: terms, fees, origination charges and monthly payments sit outside it.
- Balances are taken as they stand today; how each debt would amortise from here is not modelled.
- Up to three debts are blended directly; more can be folded in by re-entering a blended total as a single debt.
- A positive differential says the rates favour consolidating — it does not by itself say the consolidation is cheaper over its life.
- All rates are annual figures on the same quoting convention; mixing conventions blends numbers that are not comparable.
What the guards protect against
- A pile with no positive balance is refused — with nothing owed, the weighted average would divide by nothing and describe nothing.
- Balances cannot be negative: a debt is an amount owed, and a credit balance is not a debt to blend into the average.
- Every rate, including the offered consolidation rate, is refused outside a realistic range rather than answered, because the blend would not describe any real borrowing.
Provenance
Balance-weighted average rate comparison for debt consolidation
Each balance multiplied by its rate, the products summed and divided by the total balance, gives the weighted-average rate; the offered consolidation rate subtracted from it gives the differential, with a positive figure favouring the offer.
Educational reference, not financial advice, and a rate comparison rather than a total-cost one. The signed pack carries its own citation; the page reports the verification state of the release it mounted rather than asserting one.