Credit Card Terms Average Daily Balance

Average Daily Balance a common method by which credit card issuers calculate the amount of interest that you, the credit card holder will be charged each billing cycle.

The average daily balance calculations more specifically mean that each day's balance on your card is added up and then divided by the number of days on that billing cycle. This number is multiplied by Annual Percentage Rate and days in the billing cycle and divided by number of days in that particular year.
Sound confusing?

Here is an example

If the average daily balance on your card is $1000, your APR is 9.9 and there are 30 days in the billing cycle and 365 days in the year,
then the average daily balance would be $81.37

($1000 x .99 x 30) / 365 = $81.37