How to Calculate Average Daily Balance

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:

DayBalance
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.

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