Debt from loans and credit cards can help you achieve your diverse financial goals and live a comfortable life. However, the same debt can also pose a problem if you are not able to pay it back on time. This can lead to more borrowing and put you in a never-ending cycle of debt. However, there is a way to avoid this debt trap. Keep reading to find out more.
Published on 21 January 2023
A debt trap is a situation where you are left with no option but to take on fresh debt to repay your old debt. This creates a constant loop that is hard to get out of. A debt trap is usually caused when you take on more debt than you have the capacity to repay. This may be because of a miscalculation, loss of job, or if you face an unexpected financial emergency and experience a shortage of funds.
Now that you know what is meant by a debt trap, you must also know how to avoid it. Here are some things that can help:
Now that you know what is meant by the debt trap and how to avoid it, let’s move on to some frequently asked questions.