This is one of the most common computation methods that credit card issuers use to calculate account balance. To figure the balance due, the issuer totals the beginning balance for each day in the billing period and subtracts any credits made to your account that day. While new purchases may or may not be added to the balance, depending on your plan, cash advances typically are included. The resulting daily balances are added for the billing cycle. The total is then divided by the number of days in the billing period to get the "average daily balance."
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.
The application of a periodic rate to the average daily balance. The average daily balance is calculated by adding the balance in the account for each day of the period and dividing that figure by the number of days in the period.