Ways You May Be Accumulating Debt Without Realising

Most people, at any point in their lives, will typically have some debts to pay. Common and ‘healthy’ debts for a lot of people include housing loans, education loans, and car loans. However, incurring too much debt beyond one’s financial abilities is never a wise idea.

Yet, many do not realise the debts they may incur without their knowledge. Or, perhaps, they overlook each debt as small amounts – but in reality, the little things add up.

It is easier to steer clear of huge hefty loans because people are well aware about its dangers. But here are some of the little debts that you might not realise are eating into your finances, especially if you allow them to accumulate and grow.

Buying through installment plans

It is common to have the option to purchase an item in installments, especially with items costing a significant amount of money. You may opt to pay a few dollars each month instead of paying a few hundred dollars to get a new phone, or pay a little each month to purchase a new piece of furniture.

These installment plans are treated like any other short term loan you may take. Some even include interest rates depending on the length of the plan. While buying through installments may help some people afford costly purchases, having too many items on installment payments can quickly escalate into a significant amount of debt.

So, it’s always recommended to think twice before committing to an installment payment plan. Consider how many items you are currently paying off before you sign off on yet another purchase to avoid growing this debt.

Contract subscriptions

Got a good deal on that Netflix or Spotify subscription? But beware – it’s always worth reading the terms and conditions again to make sure it’s not landing you into a debt that will burden your finances.

Some subscription plans are advertised with highly attractive rates, but the catch often comes in the form of a minimum contractual period. For example, you might see a gym membership at $1 per month, but find out later that the $1 monthly fee is only applicable to the first 3 months of an obligatory 12-month subscription period, where the remaining 9 months will cost you $50 a month.

This means that you are under a commitment to pay up all 12 months of subscription fees, whether you end up using the service or not. Essentially, that’s the same as being in debt for 12 months. With that in mind, you’ll want to read and think carefully before adding another subscription to your list of monthly expenditure.

Credit card debt

Credit cards are some of the most secure and most convenient payment methods available, especially when you are looking to spend huge sums of money. They are also the preferred payment methods for online shopping. Besides, making credit card purchases come with additional benefits such as reward points that you can redeem for discounts or miles for air travel.

Paying back your credit card debt can be done in two ways – either you pay in full or you pay a minimum sum. When you pay a minimum sum, monthly interests kick in and you end up in a debt that grows. And for some cards, the interest can be as high as 26% per annum.

Thus, don’t be under the impression that credit card bills are a small matter – they are not! It’s best to pay them up in full every month. If you realise that you are unable to fulfil the payments each month, it is a sign you may be spending beyond your means.


Sometimes people accumulate debt without their knowledge, and these turn out to be the most dangerous debts to your finances. Now that you know about these sneaky ways debt can creep into your life, it is advisable to review your finances and keep a clear record of the debts you are racking up. In some ways, debts like low-interest personal loans can be helpful. But when gone overboard, any debt has the potential to make a dent in your financial health.

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