The **average daily balance** (or *daily average balance*) is calculated by adding the ending balances of each day for a defined number of days (usually 30 days for credit card calculations) and dividing it by that total number of days.

For example:

- Ending balance for Day 1: $1000.00
- Ending balance for Day 15: $2000.00 (because you bought some things worth $1000 on this day)
- Ending balance for Day 20: $1500.00 (because you paid off $500 on this day)

The above example would really look like this:

Day | Balance |
---|---|

1 | $1000.00 |

2 | $1000.00 |

3 | $1000.00 |

4 | $1000.00 |

5 | $1000.00 |

6 | $1000.00 |

7 | $1000.00 |

8 | $1000.00 |

9 | $1000.00 |

10 | $1000.00 |

11 | $1000.00 |

12 | $1000.00 |

13 | $1000.00 |

14 | $1000.00 |

15 | $2000.00 |

16 | $2000.00 |

17 | $2000.00 |

18 | $2000.00 |

19 | $2000.00 |

20 | $1500.00 |

21 | $1500.00 |

22 | $1500.00 |

23 | $1500.00 |

24 | $1500.00 |

25 | $1500.00 |

26 | $1500.00 |

27 | $1500.00 |

28 | $1500.00 |

29 | $1500.00 |

30 | $1500.00 |

Total | $40,500.00 |

Now divide the total ($40,500.00) by the total number of days (30) and you get an average daily balance of $1,350.00 which is what your credit card company will calculate your credit card interest against.

To make your life easier, I have created an **average daily balance calculator**.