Average Daily Balance Calculator
Calculate your average daily balance and the resulting interest — enter each balance and how many days it was held, plus the APR, for the billing cycle.
An estimate of the average daily balance method. Card issuers may compound daily, treat new purchases or payments differently, or exclude certain balances — check your cardholder agreement. Not financial advice.
How to calculate average daily balance
The average daily balance is what most credit-card issuers use to charge interest. They look at your balance on each day of the billing cycle and average it. When your balance changes during the cycle, multiply each balance by the number of days you held it, add those up, and divide by the total days.
average daily balance = Σ(balance × days) ÷ Σ(days)
For example, $1,000 for 20 days then $1,500 for 10 days is (1,000 × 20 + 1,500 × 10) ÷ 30 = 35,000 ÷ 30 = $1,166.67. The finance charge is then the average daily balance times the daily rate (APR ÷ 365) times the days in the cycle: 1,166.67 × 0.20 ÷ 365 × 30 ≈ $19.18 at 20% APR.
Methods vary by issuer (some compound daily or treat new purchases differently), so check your cardholder agreement — this is an estimate, not financial advice.
Frequently asked questions
How do you calculate the average daily balance?
Add up the balance for each day of the billing cycle, then divide by the number of days. If the balance changes, multiply each balance by the days it was held, add those products, and divide by the total days: Σ(balance × days) ÷ Σ(days).
What is the average daily balance method?
It is the most common way card issuers calculate interest. They track your balance each day of the cycle, average it, then apply the daily rate (APR ÷ 365) over the number of days in the cycle.
How is credit card interest calculated from it?
Finance charge = average daily balance × (APR ÷ 365) × days in the cycle. For example, a $1,166.67 average balance at 20% APR over a 30-day cycle is 1,166.67 × 0.20 ÷ 365 × 30 ≈ $19.18.