# How is the reserve balance calculated?

Last updated on July 31, 2020

We calculate the reserve balance for the current day as a percentage of the sum of all charges in the period starting five (5) months prior to the start of the current month and ending the previous full day. This means that the maximum time for a transaction to be considered in the calculation for the reserve balance is just less than six (6) months. The percentage, also known as the reserve ratio, is specific to your account.

## Examples

If today is 16 July and the reserve ratio is 10%, the reserve balance will be 10% of the sum of all charges from February through June plus the charges during 1-15 July.

Month February March April May June July (1-15)
Charge total 100 100 100 100 100 50

For the above monthly charge totals, the calculation is

``````(100 + 100 + 100 + 100 + 100 + 50) * 0.10 = 55
``````

If today is 31 July and the reserve ratio is 10%, the reserve balance will be 10% of the sum of all charges from February through June plus the charges during 1-30 July.

Month February March April May June July (1-30)
Charge total 100 100 100 100 100 95

For the above monthly charge totals, the calculation is

``````(100 + 100 + 100 + 100 + 100 + 95) * 0.10 = 59.5 # converts to 59
``````

We remove the decimal component to get `59` for the final reserve amount.

If today is 1 August and the reserve ratio is 10%, the reserve balance will be 10% of the sum of all charges from March through the end of July.

Month March April May June July
Charge total 100 100 100 100 100
``````(100 + 100 + 100 + 100 + 100) * 0.10 = 50
`````` 