Janet just got her credit card bill. The bill is for a 30 day billing period. The bill indicated that she started with a $900 balance, on day 14 charged $200, on day 20 charged $99, on day 26 paid $500. There was no other activity on the account during the 30 day period. What is her average daily balance for the month if calculated inclusiveof new purchases on the day they were incurred?
Answer : Average daily balance : $ 966.3
Working Notes
We provided with the following information
Begining Balance a $900 balance
on day 14 charged $200
on day 20 charged $99,
.on day 26 paid $500.
Billing cycle is 30 Days
We take the beginning balance of your Balance Transfers each day, add any new BalanceTransfers charged on that day, and subtract any payments, credits, and unpaid finance charges attributableto the balance for Balance Transfers. That gives us the daily balance for your Balance Transfers. We then add up all the daily balances for the billing cycle and divide them by the number of days in the billing cycle.
We take the beginning balanceof your Purchases/Debits each day, and subtract any payments, credits, and unpaid finance chargesattributable to the balance for Purchases/Debits. That gives us the daily balance for your Purchases/Debits.
Day 1 : $ 900 Balance
day 14 :$1100 (200, Charged)
day 20 : $1199, (99 Charged)
day 26 : $ 699 (500,paid)
To calculate your average daily balance you must total your balance from each day in the billing cycle and divide by the number of days in the cycle.
Day 1 Balance + Day 2 Balance + Day 3 Balance+Day 4 Balance…) / number of days in billing cycle
900*13 =11700
1100*6 =6600
1199*6=7194
699*5 = 3495
Total = 28989
28989/30
966.3
