average daily balance method

Definition

A technique for calculating finance charges (such as in a bank account, charge account, or credit card account) based on average balance that existed each day. Interest charges under this method are usually higher than the adjusted balance method but lower than the previous balance method.

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The average daily balance method was really efficient and I thought it was one of the best techniques out there.

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You should try and figure out a way to break down the average daily balance method and learn how to improve from it.

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John Smith decided to cut up his Chase credit card because it charged 18 percent interest using the average daily balance method and he didnt want to spend the next 30 years paying it off.

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average daily balance adjusted balance method