Explore commonly used personal finance terms.
The average balance is the mean amount of funds held in an account over a set period, typically calculated by adding the balance at the end of each day and dividing by the number of days in the period. Financial institutions use average balance calculations to determine eligibility for certain account benefits, such as waiving fees or qualifying for interest. This metric is essential for budgeting and financial management, as it provides an accurate view of an account’s activity and aids in maintaining minimum required balances for accounts.
