Average Daily Balance Interest Calculator

Work out average daily balance interest instantly with clear inputs, formula shown and shareable results.

About Average Daily Balance Interest Calculator

Interest and fee waivers are assessed on the average daily balance, not the opening or closing figure. Weighting each balance by the days it was held shows why a brief high balance does little for the average.

Formula

Average daily balance

ADB = Σ(balance × days) / days in month; interest = ADB × rate × days / 365

Worked example

With the default values below, Average Daily Balance Interest Calculator returns Average Daily Balance of $250,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Balance For The First Part Of The Monthminimum 0: 400,000
Balance For The Rest Of The Monthminimum 0: 150,000
Days At The First Balanceaccepts 1–30: 12
Annual Interest Rateaccepts 0–100 %: 4 %

Results

Average Daily Balance: $250,000.00
Interest For The Month: $821.92
Interest Over A Year At That Average: $10,000.00
Effective Yield On The Peak Balance: 2.4658%

Step by step

1Values used
2Average daily balance
3Average Daily Balance= 250,000.00
4Interest For The Month= 821.92
5Interest Over A Year At That Average= 10,000.00
6Effective Yield On The Peak Balance= 2.4658

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

Frequently Asked Questions

Why does the bank use an average?

It reflects the funds actually available to the bank across the period rather than a single snapshot.

Does timing of deposits matter?

Considerably. Money in for the whole month counts fully; money in for three days barely registers.