Credit cards can be a smart financial tool for Marylanders juggling expenses, especially since many cards offer rewards and cash back. But if you’re not paying off your balance each month, those perks can get pricey fast.
If you’re carrying a balance, you’re not alone. According to TransUnion’s February 2025 Credit Industry Snapshot, Marylanders carried an average credit card balance of $7,158. The Federal Reserve reports that these balances carry a 21.37% interest rate.
Here’s what that balance is costing you and how you can reduce the impact on your financial well-being.
The cost of carrying a balance
When you carry a balance, the credit card company tacks on interest, also known as annual percentage rate (APR), to your principal balance.
Here’s the kicker: most credit cards compound your interest daily.
This means today’s interest gets added to tomorrow’s balance. Basically, your interest earns interest. And the longer you carry a balance, the more you pay.
What that extra interest adds up to
Estimating your monthly interest is easy. You just need a few pieces of information.
- Your APR. You can find this on your card statement.
- Your daily interest rate. This is your APR ÷ 365.
- Your average daily balance. This is not your ending balance. It’s the sum of every purchase you made during the billing cycle, divided by the billing cycle’s length.
Multiply it all out like this: (Average daily balance × daily rate) × number of days in billing cycle = interest charge
Let’s say your APR is 16.99%, your daily rate is 0.0465%, and your average balance over 30 days is $1,000. That’s about $14.06 in interest for just one month, and it snowballs from there.
Best practice is paying your card off every month
Paying the full balance on your credit card every month is ideal, if you can manage it. Unpaid balances start racking up interest right after your billing cycle ends. The sooner you pay down your balance, the less you’ll pay overall.
Not carrying a balance month-to-month also helps your credit score. Paying on time, in full can give your credit a boost, as does keeping your credit use under 30% of your limit.
Balance transfers can stop the interest spiral
Are you stuck in the choppy APR accrual cycle? There is a way to course correct and get back to smooth sailing.
One option to consider is a balance transfer. That’s when you move your current credit card debt to another card with a lower APR. You can do this in a few, short steps.
- Research cards with lower APRs. Even if the interest rate is a few percentage points lower, you can shave months off your repayment timeline.
- Move your current debt to a card with a lower APR. Many financial institutions offer a promotional period for low or no interest. This allows more of your payment to go to principal (your balance) rather than interest.
- Consolidate multiple cards onto one card. You simplify your finances if you’re only having to pay one payment a month, versus several.
- Focus on paying down your principal balance. Even if you can’t pay the balance off before the introductory offer ends, you can still save money, even if you’re making the same payment amount.
Let’s crack the debt cycle
Your credit card doesn’t have to cost you more than it should. If you’re not sure how to reduce your interest payments or balance, we can help.
We are offering a limited-time credit card balance transfer promotion. Transfer your existing credit card debt and enjoy 0% APR† for up to 12 months*** across a range of SECU credit cards, each with unique rewards and features to match your lifestyle.
Take control of your credit cards. Financial freedom is right around the corner.
