average daily balance

average daily balance definition - business

average daily balance

The sum of the daily account balances during a given period divided by the number of days in the period. Financial institutions frequently use an account's average daily balance to calculate interest paid on savings accounts. Most credit card companies use average daily balance to calculate a cardholder's monthly finance charge.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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