Average Daily Balance Method Law and Legal Definition

According to 12 CFR 230.2 [Title 12 -- Banks and Banking; Chapter II -- Federal Reserve System; Subchapter A -- Board of Governors of the Federal Reserve System; Part 230 -- Truth in Savings (Regulation DD)], average daily balance method means “the application of a periodic rate to the average daily balance in the account for the period. The average daily balance is determined by adding the full amount of principal in the account for each day of the period and dividing that figure by the number of days in the period.”