Credit cards are a great way to manage your finances, but one thing you may not know is how to calculate your average daily balance. In this article, we’ll show you how to do it step by step, so that you can keep better track of your finances.
What is the Average Daily Balance?
The average daily balance is the most recent owed amount on a credit card, divided by the number of days in the billing cycle.
How to Calculate the Average Daily Balance on a Credit Card?
If you’re like most people, you use your credit card for everyday expenses. But how do you know how much credit card debt you’re actually in?
To calculate your average daily balance, take the total amount of purchases you’ve made on your credit card in the past 30 days and divide it by 30. That’s your average daily balance.
So if you’ve made 10 purchases on your credit card in the past 30 days, your average daily balance would be $100. If you make 20 purchases, your average daily balance would be $200. And if you make 30 purchases, your average daily balance would be $300.
How to Make Payments on Your Credit Card?
If you have a credit card with an average daily balance, it’s easy to calculate how much you need to pay each month to keep your balance below 30% of the total.
To find the average daily balance on your credit card, divide the total amount of debt on the card by the number of days in the month.
For example, if you have a $5,000 debt on a card with an average daily balance of $100, divide $5,000 by 30 to find that you need to pay $167.50 each day to keep your balance below 30% of the total.
What are the Different Types of Credit Cards?
When it comes to credit cards, there are a variety of different types to choose from. This can be confusing, so let’s take a look at each type and how they work.
First, let’s look at the traditional credit card. This is the type of card that you use to borrow money from a lending institution. The main difference between a traditional credit card and a debit card is that a traditional credit card allows you to borrow money up to a certain limit in order to purchase items or withdraw cash. Once you reach your limit, you will need to pay back the borrowed amount plus interest.
Second, let’s take a look at the plastic credit card. These cards are essentially the same as traditional credit cards, but they are designed for consumers who have excellent credit scores. As long as you have excellent credit, you can get approved for a plastic credit card. The main difference between these cards and traditional cards is that plastic credit cards do not have an interest rate cap. This means that you could end up paying more in interest over time if you don’t pay your bill on time.
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Conclusion
If you’re ever feeling overwhelmed trying to keep track of your finances, calculating your average daily balance can be a lifesaver. This simple calculation will help you figure out how much money is currently available on your credit card and which bills need to be paid first. Plus, it’s a great way to stay aware of your spending and ensure that you’re not overspending.