Understanding Your Average Monthly Outstanding Balance
Learn how to manage your credit accounts by understanding your average monthly outstanding balance.
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Average Monthly Outstanding Balance refers to the average amount owed on a credit account over a month. It's calculated by summing the daily outstanding balances and dividing by the number of days in the month. Maintaining a low average monthly outstanding balance is crucial for managing debt effectively and improving credit scores.
FAQs & Answers
- How is the average monthly outstanding balance calculated? It is calculated by summing the daily outstanding balances over a month and dividing by the number of days in that month.
- Why is it important to maintain a low average monthly outstanding balance? Keeping a low balance helps in managing debt effectively and can lead to improved credit scores.
- What is considered a healthy outstanding balance on credit? A healthy outstanding balance is generally one that is low relative to your credit limit, typically below 30%.
- How can I improve my average monthly outstanding balance? You can improve it by paying down debt consistently, avoiding late payments, and monitoring your spending.