You have a credit card that charges an annual interest rate of 15.45%. The table below shows your activity for the month of December.

Date
Activity
Amount
Balance
December 1
Beginning Balance

695.26
December 8
Purchase
47.91
743.17
December 9
Payment
-275.00
468.17
December 11
Purchase
83.14
551.31
December 24
Purchase
17.62
568.93
December 25
Purchase
42.93
611.86
December 31
Ending Balance

611.86
What is the average daily balance for this account?

To calculate the average daily balance of your credit card account for the month of December, we need to first break down the balances for each period of time based on the dates when transactions occurred.

### Step 1: Break down the time periods and balances

- **December 1 - December 7 (7 days):**
  - Balance = \$695.26
  
- **December 8 (1 day):**
  - Balance = \$743.17 (after the purchase of \$47.91)
  
- **December 9 - December 10 (2 days):**
  - Balance = \$468.17 (after the payment of \$275.00)
  
- **December 11 - December 23 (13 days):**
  - Balance = \$551.31 (after the purchase of \$83.14)
  
- **December 24 (1 day):**
  - Balance = \$568.93 (after the purchase of \$17.62)
  
- **December 25 - December 30 (6 days):**
  - Balance = \$611.86 (after the purchase of \$42.93)
  
- **December 31 (1 day):**
  - Balance = \$611.86

### Step 2: Calculate the total balance for each period

We now multiply the balance by the number of days that balance was held.

- **December 1 - December 7 (7 days):**  
  \$695.26 × 7 = \$4,866.82
  
- **December 8 (1 day):**  
  \$743.17 × 1 = \$743.17
  
- **December 9 - December 10 (2 days):**  
  \$468.17 × 2 = \$936.34
  
- **December 11 - December 23 (13 days):**  
  \$551.31 × 13 = \$7,167.03
  
- **December 24 (1 day):**  
  \$568.93 × 1 = \$568.93
  
- **December 25 - December 30 (6 days):**  
  \$611.86 × 6 = \$3,671.16
  
- **December 31 (1 day):**  
  \$611.86 × 1 = \$611.86

### Step 3: Calculate the total sum of the balances and the total number of days

- **Total balance:**  
  \$4,866.82 + \$743.17 + \$936.34 + \$7,167.03 + \$568.93 + \$3,671.16 + \$611.86 = \$18,565.31
  
- **Total number of days:**  
  7 + 1 + 2 + 13 + 1 + 6 + 1 = 31 days

### Step 4: Calculate the average daily balance

The average daily balance is the total balance divided by the total number of days.

\[
\text{Average daily balance} = \frac{\$18,565.31}{31} = \$598.88
\]

### Conclusion:
The average daily balance for the month of December is **\$598.88**.

Would you like further details or clarification?

Here are five related questions:
1. How does the average daily balance method impact interest calculations?
2. What other methods are used to calculate credit card interest?
3. How does making payments earlier in the month affect the average daily balance?
4. What is the relationship between annual interest rates and monthly interest rates?
5. How does credit card interest accrue daily versus monthly?

**Tip:** Paying off large portions of your balance early in the billing cycle can significantly reduce the average daily balance and lower interest charges!

You have a credit card that charges an annual interest rate of 15.45%. The table below shows your activity for the month of December.

Date
Activity
Amount
Balance
December 1
Beginning Balance
695.26
December 8
Purchase
47.91
743.17
December 9
Payment
-275.00
468.17
December 11
Purchase
83.14
551.31
December 24
Purchase
17.62
568.93
December 25
Purchase
42.93
611.86
December 31
Ending Balance
611.86
What is the average daily balance for this account?

Learn how to calculate the average daily balance for your credit card account for the month of December. This example includes multiple purchases and payments, with step-by-step calculations of the average daily balance based on balances held over specific periods. Ideal for students in Grades 10-12.

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