How is the average daily balance of credit cards calculated?
The average daily balance on a credit card is an important item for consumers to understand. There are several factors used in calculating the average daily balance, including the daily balance and the number of days in the billing period.Daily BalanceAt the end of each day, the credit card company calculates the balance of a credit card. The daily balance is calculated by adding new charges and subtracting payments and refunds from the previous day’s balance.Number of Days in the Billing PeriodThe number of days in a billing period is a simple calculation. It is the number of days from the beginning of the billing period to the end of the billing period.Average Daily Balance CalculationThe calculation of the average daily balance is the sum of the daily balances during the billing period divided by the number of days in the billing period.ImportanceMany credit card companies use the average daily balance as the basis for the amount of interest they charge their cardholders.ExceptionTh
