# Create Average Daily Balance Calculator in Excel (2 Easy Methods)

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In this article, we will learn to create an average daily balance calculator in Excel. Credit card companies use the Average Daily Balance Method to charge interest to their customer during a billing cycle. Today, we will demonstrate 2 methods. Using these methods, you will be able to create an average daily balance calculator in Excel easily. So, without further delay, let’s start the discussion.

## What Is Average Daily Balance?

The Average Daily Balance method is a way to find the interest or finance charge on a credit card. To calculate the average daily balance, we multiply the balance for each day during a billing period and then, calculate their average. The general formula for Average Daily Balance can be written as:

`=[Day 1 Balance + Day 2 Balance + Day 3 Balance…]/Number of Days in that Billing Period`

After calculating the Average Daily Balance, we need to find the Finance Charge for a billing cycle. The formula of Finance Charge is:

`=(Average Daily Balance X APR X Days in Billing Cycle)/365`

Here, APR is the Annual Percentage Rate.

## 2 Easy Methods to Create Average Daily Balance Calculator in Excel

To explain the methods, we will use 2 different datasets in the following two methods. In the first method, we will use a dataset that contains Days, Transactions, Balance, Number of Days, and Total columns. Here, we have Transactions for a range of days. Using that, we need to find the Balance, No. of Days, and Total value first. Then, we will calculate the Average Daily Balance. In the second method, we will use a dataset that contains Balance for each day from Day 1 to Day 14. It also contains the Purchase and Payment columns. Let’s follow the methods to learn more.

### 1. Use the SUM Function to Create an Average Daily Balance Calculator in Excel

In the first method, we will use the SUM function to create an average daily balance calculator in Excel. But before applying the SUM function, we need to evaluate the missing values in the dataset. Let’s follow the steps below to see how we can create an average daily balance calculator using the SUM function.

STEPS:

• Firstly, we need to fill the Balance column.
• To do so, we need to add the Purchase amount with the Remaining/Beginning Balance of the previous cell.
• In the case of the Payment amount, we need to subtract it from the Remaining/Beginning Balance.
• Here, we added \$300 with \$1300 first in Cell D6.
• Then, added \$200 with \$1600 in Cell D7.
• In Cell D8, we subtracted \$400 from \$1800. • Secondly, we need to fill the No. of Days column.
• You can calculate the number of days by subtracting the lower limit from the upper limit in the range of Days and then adding 1 with it. For example, in Cell E7, we performed 20-11+1 to get 10 as the number of days. • Thirdly, select Cell F5 and type the formula below:
`=D5*E5` • After that, press Enter and drag the Fill Handle down. • As a result, you will see the Total Balance for each span of days. • In the following step, you need to find the Total Number of Days.
• For that purpose, select Cell E10 and type the formula below:
`=SUM(E5:E8)`
• Press Enter. • Also, type the formula below in Cell F10 to get the Total Balance:
`=SUM(F5:F8)`
• Also, hit Enter to see the result. • At this moment, select Cell E12 and type the formula below:
`=F10/E10` Here, we have divided the Total Balance by the Total Number of Days in a billing cycle to get the Average Daily Balance.

• Press Enter to see the Average Daily Balance for a billing cycle of 30 days. • To find the Finance Charge for a billing cycle, you need to type the formula below in Cell E16:
`=(E12*E14*E15)/365` Here, E12 is the Average Daily Balance, E14 is the Annual Percentage Rate (APR) and E15 is the Days in Billing Cycle.

• Finally, hit the Enter key to get the Finance Charge for a billing cycle. ### 2. Insert Excel AVERAGE Function to Make an Average Daily Balance Calculator

We can use the AVERAGE function directly to make an average daily balance calculator. The Average function finds the arithmetic average of a range of numbers. To use the Average function, we need to have a dataset that contains the Balance for each day in a billing cycle. In the dataset below, you can see we have a record of Purchase, Payment, and Balance for a billing cycle of 14 days. Let’s follow the steps below to see how we can use the Average function to build an average daily balance calculator.

STEPS:

• First of all, select Cell E5 and type the formula below:
`=G5+C5-E5`
• Press Enter to see the result. • Secondly, type the formula below in Cell E6:
`=E5+C6-D6`
• Hit Enter. • Thirdly, drag the Fill Handle down to Cell E18. • As a result, you will see the Balance for each day.
• You can see a Payment on the 6th day.
• After the payment, the Balance is reduced by \$200. • In the following step, select Cell E20 and type the formula below:
`=AVERAGE(E5:E18)` • Also, press Enter to see the average daily balance. • Finally, to find the Finance Charge for a billing cycle, you need to type the formula below in Cell G15:
`=(G11*G13*E20)/365`
• Press Enter to see the result. ## What is ExcelDemy?

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