D
General
Debt Trap
A situation where a borrower takes on new debt to repay existing debt, creating a cycle that becomes increasingly difficult to escape. Common causes include high-interest payday loans, multiple store accounts, and borrowing more than you can afford. The NCA was designed partly to protect consumers from debt traps.
Usage Examples
"Taking a payday loan to pay off another payday loan is a classic debt trap."
"He fell into a debt trap after opening five store accounts to furnish his new home."
"Debt counselling can help you escape a debt trap by restructuring your payments to affordable levels."