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Average Daily Balance Method

Last Updated: November 14, 2006 | Related resource areas: Personal Finance

The most common method of calculating the balance on a credit card in order to determine finance charges. The total of the unpaid balances for each day in a billing period is divided by the number of days in the billing period (e.g., $6,000 divided by 30 = $200). The finance charge is then figured on this average balance.


More information:

Financial Security: Consumer Credit, glossary

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