Definition: a method of calculating finance charge that is calculated using the sum of the balance owed each day in the billing cycle and dividing by the number of days in the billing cycle. This number is multiplied by the APR and days in the billing cycle, then divided by the number of days in the year.
Example: average daily balance = $100, APR = 15%, days in billing cycle = 30
(ADB * APR * days in billing cycle)/days in year
(100 * .15 * 30)/365 = $1.23
Example: average daily balance = $100, APR = 15%, days in billing cycle = 30
(ADB * APR * days in billing cycle)/days in year
(100 * .15 * 30)/365 = $1.23
