How to Calculate Average Checking Account Balance

Banks often use your average checking account balance to calculate fees that you pay to them for holding your funds. Your checking account can also earn interest every month or annually, using the average bank account balance for the amount of interest due. Your bank might also offer you perks and rewards throughout the year. Your eligibility often depends on your average balance each month or another period.

Your bank statements almost always show a beginning date for each monthly statement that you receive. Banks don't always use a calendar month for your statement though. Your statement each month lists all your credits or deposits, debits or withdrawals and any fees, when applicable. However, your bank balance will not include any debits or credits that your bank hasn't processed by the end of the business day of your statement closing date.

The amount of money in your checking account on the first day of each statement period is always the same as your previous month's ending balance. If you make new deposits or withdrawals after your statement ending date, the bank can't post them to your account until your next statement's begin date. The bank also uses your beginning balance each month to reconcile new activity each month, adding or subtracting your transactions from your beginning balance.

Find your daily balance for each statement period. Calculate your daily balance using the bank's list of account additions, withdrawals and fees. Keep a running total by date of the resulting amounts. When you have no transactions or activity on a specific date, carry the last balance forward to the next transaction until your statement end date. To see your average daily balance, add all your daily balances then divide this amount by the total days in your statement.

Get a snapshot of your average bank account balance by calculating your monthly balances. Add your beginning balance for each month shown on your statements together. Divide your total by 12 months to calculate your average monthly balance for the year.

Comparing your average monthly balance to individual monthly balances could help you find fluctuations in spending or income. Remember, items that don't hit your account before your statement end date won't have any effect on that monthly balance. However, they do appear on the statement you receive the next month. Adjusting payment dates for regular monthly expenses lets you control sharp fluctuations in your average checking account balance.

While some banks offer perks when you have a healthy average bank account balance, many charge you myriad fees when you don't. Knowing how to calculate your average balance is extremely important for avoiding monthly fees for having an account. Banks often offer free checking accounts for customers with direct deposits of payroll or government benefits. Otherwise, to get free checking, you'll need to maintain a specific balance each month.

Checks, debits card transactions and pre-arranged recurring payments don't always arrive at your bank when you expect them. With most checking accounts, banks charge hefty overdraft fees when your daily balance isn't enough to process your incoming debits. An alternative to paying these fees is overdraft protection. Unfortunately, banks often collect fees and interest for this service too.