Question: What is the Average Daily Balance Formula?
Answer: Here's how the average daily balance formula works:
average daily balance * APR * days in billing cycle / 365
average daily balance * APR * days in billing cycle / 365
To get your average daily balance, add up your credit card balance for every day in the billing cycle. Day 1, Day 2, Day 3, and so on. Then divide the result by the number of days in the billing cycle.
Your finance charge is calculated by multiplying the average daily balance by your APR and the number of days in the billing cycle, then dividing by the number of days in the year.
