Savings Analysis
Enter your current rates and amounts, and a target blended rate to see potential savings.
.blended-rate-calculator {
font-family: sans-serif;
border: 1px solid #e0e0e0;
padding: 20px;
border-radius: 8px;
max-width: 600px;
margin: 20px auto;
background-color: #f9f9f9;
}
.blended-rate-calculator h3 {
text-align: center;
color: #333;
margin-bottom: 20px;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(2, 1fr);
gap: 15px;
margin-bottom: 20px;
}
.form-group {
display: flex;
flex-direction: column;
}
.form-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.form-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
width: 100%;
box-sizing: border-box;
}
.form-group input:focus {
outline: none;
border-color: #007bff;
box-shadow: 0 0 0 2px rgba(0, 123, 255, 0.25);
}
button {
grid-column: 1 / -1;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1rem;
cursor: pointer;
transition: background-color 0.3s ease;
}
button:hover {
background-color: #0056b3;
}
.calculator-results {
text-align: center;
margin-top: 20px;
padding: 15px;
background-color: #fff;
border: 1px solid #e0e0e0;
border-radius: 4px;
}
#result p {
font-size: 1.1rem;
color: #333;
margin: 0;
}
function calculateBlendedRateSavings() {
var currentRate1 = parseFloat(document.getElementById("currentRate1").value);
var amount1 = parseFloat(document.getElementById("amount1").value);
var currentRate2 = parseFloat(document.getElementById("currentRate2").value);
var amount2 = parseFloat(document.getElementById("amount2").value);
var targetRate = parseFloat(document.getElementById("targetRate").value);
var resultDiv = document.getElementById("result");
if (isNaN(currentRate1) || isNaN(amount1) || isNaN(currentRate2) || isNaN(amount2) || isNaN(targetRate)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (amount1 < 0 || amount2 < 0 || currentRate1 < 0 || currentRate2 < 0 || targetRate 0) {
outputHTML += "Your current weighted average rate is approximately:
" + (currentWeightedRate * 100).toFixed(2) + "%";
outputHTML += "Current annual interest cost on total amount:
$" + currentInterestCost.toFixed(2) + "";
outputHTML += "Annual interest cost at target blended rate:
$" + targetInterestCost.toFixed(2) + "";
outputHTML += "Potential Annual Savings:
$" + potentialSavings.toFixed(2) + "";
} else if (potentialSavings < 0) {
outputHTML += "Your current weighted average rate is approximately:
" + (currentWeightedRate * 100).toFixed(2) + "%";
outputHTML += "Your target blended rate of " + targetRate + "% is higher than your current weighted average rate.";
outputHTML += "You may incur additional costs of:
$" + Math.abs(potentialSavings).toFixed(2) + " annually.";
} else {
outputHTML += "Your current weighted average rate is approximately:
" + (currentWeightedRate * 100).toFixed(2) + "%";
outputHTML += "Your target blended rate is the same as your current weighted average rate.";
outputHTML += "
No significant savings expected.";
}
resultDiv.innerHTML = outputHTML;
}
Understanding Blended Rate Savings
A blended rate, in financial contexts, refers to the average interest rate across multiple accounts or loans. Often, individuals have various financial instruments with differing interest rates and principal amounts, such as savings accounts, certificates of deposit (CDs), or even different loan tranches. A blended rate calculation helps to understand the overall interest landscape.
Why Calculate a Blended Rate?
Calculating a blended rate is particularly useful when you're considering consolidating finances, refinancing, or simply aiming to optimize your financial returns or reduce your interest expenses. By understanding your current weighted average rate, you can set realistic target rates for new financial products or strategies. This calculator focuses on identifying potential savings by comparing your current combined interest cost with what you might achieve if all your funds were managed under a single, more favorable blended rate.
How the Blended Rate Savings Calculator Works
This calculator takes into account two distinct sets of financial instruments, each with its own interest rate and associated principal amount. It first computes your current effective weighted average interest rate based on the amounts invested at each rate. This current average rate is then used to calculate your total annual interest earned or paid.
Next, it uses your desired target blended rate to calculate what your annual interest would be if all your funds were consolidated at that rate. The difference between your current annual interest cost and the potential interest cost at the target rate reveals the possible savings (or additional costs if the target rate is less favorable). This provides a clear, quantifiable insight into the financial impact of aiming for a different overall rate.
Example Scenario:
Imagine you have $50,000 in a savings account earning 4.0% annually and $75,000 in a CD earning 5.5% annually. Your total investment is $125,000.
- Your current weighted average rate is: ((4.0% * $50,000) + (5.5% * $75,000)) / ($50,000 + $75,000) = (2000 + 4125) / 125000 = $6125 / $125000 = 4.9%
- Your current annual interest cost is: 4.9% of $125,000 = $6,125.
Now, suppose you find a new opportunity or strategy that could effectively give you a blended rate of 4.8% on your total $125,000.
- The potential annual interest cost at 4.8% would be: 4.8% of $125,000 = $6,000.
- The potential annual savings would be: $6,125 – $6,000 = $125.
This calculator simplifies these calculations, allowing you to quickly assess the financial benefits of achieving a specific blended rate across your various financial holdings.