average daily balance

Definition

The average amount that exists in an account over a period of time. The number is calculated by adding the daily balances over a period of time and dividing by the total number of days in that period. Used in the average daily balance method for determining interest.

“ You should try and come up with a good average daily balance and figure out how to achieve it when you can. ”

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“ George realized because of his extra deposits his average daily balance was higher in the month of April then it was for the month of March. ”

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“ Many bank accounts which afford perks and benefits to depositors require high average daily balances or are subject to monthly mainenance fees. ”

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