7 Costly Debt Traps and How to Avoid Them

Not all debt is created equal.

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Not all debt is created equal. While most forms of borrowing entail risk, certain credit decisions are more likely to lead you into a downward spiral of indebtedness. We call these debt traps.

It’s incredibly easy to stumble into a debt trap. All it takes is a brief lapse in judgment. Opening a new credit card account without understanding the interest rates and fees, or the implications for your credit score, is just one example.

No one wants to become mired in debt — especially when common borrowing mistakes are avoidable. Read on to educate yourself about seven of the biggest debt traps and ways to avoid them.