Silly Question on Interest Rates

[Al-w]

Hi all,

I have the opportunity of consolidating two credit cards into a new account:

CC-1 = $14,000 @ 10.24%
CC-2 = $7,000 @ 10.24%
New = $21,000 @ 18%

The question I have is, are the 10.24 rates better or lower than what the new card rate will be? I was under the impression that Interest Rates are accumulative in their cost, meaning that the actual cost of my two cards combined is really 20.50%. So it would make sense to consolidate these into a lower interests account. However, if I'm just hallucinating, then I may be better off leaving them alone.

Any insight you may shed on this issue will be greatly appreciated!

Thanks!

[maat55]

No, 10.24 is 10.24. Their combined rate is 10.24.

[Al-w]

Thanks maat55, this helps... and now, to kill these CC's for good!

[jpg7n16]

If it helps you for future situations, I like to think of the interest rate on a per dollar basis.

Using your info above, right now you have 14,000 of these dollars at the 10.24% and another 7,000 dollars also at the same 10.24% rate. So for the 10.24% rate, you have:

14,000 + 7,000 = 21,000 @ 10.24%

So just add up all the dollars at each rate, and you'll be fine!


(And yeah 21,000 @ 10.24% is better than 21,000 @ 18%)