Mike has a credit card debt of $7,000 at a rate of 14%, a car loan of $10,000 at 8% and a $250,000 mortgage at a rate of 6.5%. His average interest rate is 6.9%

Question

Quizplus · Accepted Answer

The average interest rate is not simply the average of the three rates because it does not account for the different loan amounts. The weighted average interest rate should be calculated based on the proportion of each debt to the total debt.

Mike Has a Credit Card Debt of $7,000 at a Rate