Wednesday, December 4, 2024

Scott Bilker
Household Math™: Average Daily Balance
by Scott Bilker
 
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.

Test your frugal knowledge by trying to solve these DebtSmart, Household Math™ problems! After you complete the problem you’ll get the solution and explanation.
 
1. Most banks calculate the amount of interest you owe using the average daily balance method. That method involves adding up the outstanding balance each day in the month and taking an average.

On day 1 in the month your balance is $5,000. On day 15 your payment of $2,000 is credited to your balance. The number of days in the month is 31. What is your average daily balance?
$1,500.00
$2,500.00
$3,903.23
$3,967.74
$4,000.00
I don't know!



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