Feb
20

How to Calculate Average Daily Balance

Author Calculate Credit Card    Category Credit Cards     Tags

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.

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