WTFinance is a debt trap?

By Jackie Lam

Reviewed by Kimberly Rotter

Apr 17, 2023

Read time: 2 min

TEST.jpg

I always thought my strong credit was the way out of my debt. I used it to take out balance transfer credit cards with zero interest and move one load to another. Plus, I kept spending. 

I'm doing the right thing to pay off my debt, I lied to myself. But my debt load got larger. And those feelings of exhaustion, anger and sadness got worse. The harsh reality was staring at me in the face: I was merely moving one pile of dirt to another—and deepening the hole. 

I was stuck in a debt trap. 

Like me, you might not be aware that you've fallen into a debt trap, or that you’re at risk. And you're not alone. Here are some telltale signs that you’re in a debt trap or headed for one.

You're spending more than you earn 

Your debt load is more than what you're able to manage, but you dig yourself into a deeper debt hole because you haven’t maxed out yet. 

Your bank account balance goes to zero before your bills are paid. Your debt load continues to mount. If you sometimes borrow for everyday essentials—to pay for groceries, put gas in your car, or cover the copay for your doctor's visit—you might be spiraling into a debt trap.

You open new credit cards to pay off current ones 

One of the biggest signs you're stuck in a debt trap is opening new lines of credit in the hopes of paying off your balance on another account. The notion that you're whittling away at your debt is an illusion. 

You're probably on the debt struggle bus if you're stumped by the following questions: 

  • How many credit cards do you currently have?

  • What’s the balance on each card?

  • How much is your monthly payment on each card? 

  • How much debt have you paid off in the last year?

If you feel like you're walking through a mirror maze, more lost and confused at every turn, you might be falling into a debt trap—and you're not alone. 

Your credit card balance is going up

It can be tough to pay off your credit card balance in full each month, especially if you're struggling. We get it. Life happens. And it’s easy to put one more purchase on the card. 

Sure, you're making the minimum payments on your credit cards each month. And while that'll prevent you from harming your payment history, it's a fast-track to a debt trap. 

If your balance is increasing, it could be a sign that you're among the others dwelling in the slums of Debt Shantytown—and don't have a bus ticket to leave.

What debt? 

You just can't stand to look. You don’t check your statement. You don’t tally up your debts. Your state of oblivion might feel less painful than knowing, but letting your debt pile up without keeping an eye on it will only make things worse. 

Rising living costs, slim earnings and mounting debt can have you burying your head in the sand. If the mere thought of checking the current status of your loan and credit card balances makes you anxious, stressed, overwhelmed, and outright scared, you might be headed toward a debt trap. 

Being in a debt trap can feel hard to get out of. Knowledge is power. If you don’t know these telltale signs, you won’t know what to do. But when you know, you know, and you can start taking steps to free yourself.

If you’re in a debt trap, you’re not alone. Lots of other people (myself included) have fallen into the same dark hole. But there's hope. And there’s help. Depending on your situation, you might be able to refinance the debt and lower your costs compared to all those high-interest credit cards. If you're in a really deep hole, debt resolution could help you reduce your debt so you can get rid of debt faster than you would by just barely getting by with minimum payments. A professional debt consultant can walk you through the options for taking on your debt, for real.

Jackie Lam - Author

Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.

kim rotter 2022 2

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

Article Topics

At Achieve, it’s not what we stand for, it’s who.

Achieve Person