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Finance Dictionary and Glossary of Investment Terms
Average daily balance
Definition 1.
A method for calculating interest in which the balance owed each day by a customer is divided by the number of days. See also: Adjusted balance method and previous balance method.
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Definition 2.
The average amount that exists in an account over a period of time. The number is calculated by adding the daily balances over a period of time and dividing by the total number of days in that period. Used in the average daily balance method for determining interest.
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