Texas Finance Code 346.002 – Average Daily Balance
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(a) The average daily balance of a revolving credit account is computed by:
(1) adding all of the ending balances in the account during each day of a billing cycle; and
(2) dividing the total under Subdivision (1) by the number of days in the billing cycle.
(b) For purposes of Subsection (a), a day’s ending balance is computed by:
(1) adding the previous day’s ending balance and the amount of each loan, lease of goods, or purchase of goods or services posted to the account on the day for which the ending balance is being computed; and
(2) subtracting from the result under Subdivision (1) each credit or payment posted to the account on the day for which the ending balance is being computed.
Terms Used In Texas Finance Code 346.002
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Revolving credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or open-end credit.) Source: OCC
(c) A day’s ending balance may not include interest.