Banks employ a straightforward formula to determine the account holder's Monthly Average Balance (MAB):
MAB = (Total of end-of-the-day closing balances) / (number of days in the month)
Consequently, the monthly average balance is computed by considering two factors:
Summing up the closing balances throughout the month.
Determining the number of days in the month.
The average monthly balance is then obtained by dividing the total closing balances by the number of days in the month.