1. What is Average Daily Balance (ADB)?

The Average Daily Balance (ADB) is a method used by credit card companies to calculate interest charges. It represents the sum of daily balances divided by the number of days in the billing cycle.

2. How Does the Calculator Work?

The calculator uses the ADB formula:

Where:

• Daily balances — The balance amount for each day in the billing cycle ($)
• Days — The number of days in the billing cycle (count)

Explanation: The equation calculates the average of daily balances over a specific period, which is used to determine interest charges on credit cards.

3. Importance of ADB Calculation

Details: Accurate ADB calculation is crucial for understanding credit card interest charges, managing personal finances, and comparing different credit card offers.

4. Using the Calculator

Tips: Enter daily balances separated by commas or new lines, and the number of days in the billing cycle. All values must be valid (positive numbers).

5. Frequently Asked Questions (FAQ)

Q1: Why is ADB important for credit card users?
A: ADB determines the interest charged on your credit card balance. A lower ADB results in lower interest charges.

Q2: How can I reduce my ADB?
A: Make payments earlier in the billing cycle, pay more than the minimum payment, or pay off balances more frequently.

Q3: Does ADB include new purchases?
A: Yes, ADB includes all transactions - purchases, payments, fees, and interest charges throughout the billing cycle.

Q4: How often is ADB calculated?
A: Credit card companies typically calculate ADB for each billing cycle, usually monthly.

Q5: Are there different methods for calculating credit card interest?
A: Yes, some cards use daily periodic rate methods, but ADB is one of the most common methods used by credit card issuers.