The path to the debt trap is steep and rarely comes with a "ladder" to climb up. It's all the more important to know the risks so you can rule out falling into the debt trap in advance with your eyes wide open. A high interest loan, car financing despite debt or cell phone debt are the basis for debt in most cases.
Once you have fallen into the debt trap, the liberation is difficult and you can spend with almost certainty that you accumulate new debts faster than you pay off existing liabilities.
Financial bottleneck? These tips are easy to implement and will keep you from falling into a debt spiral and causing a cascade of high costs and subsequent expenses due to minor financial ailments.
Prevention instead of debt trap – tips against debt
When it comes to avoiding the debt trap, the nest egg is up to the top in the prevention measures. There are some tips against debt, of which building a small reserve is the most likely to convince in practice and can be done regardless of your income. Even if the amount of the reserve depends of course on your income after deduction of all monthly expenditures, you can save in any case and build up so a small cushion for the case of emergency.
Another important tip invokes reviewing your contracts for insurance, taking a critical look at your credit card use, and considering whether to discount an overly expensive loan by rescheduling it. Once a year, you should check your liabilities with banks and your insurance policies, eliminate unnecessary contracts, and also cancel checking accounts that you no longer use.
An overly expensive cell phone contract automatically leads to cell phone debt, so you do best prevention by changing your plan or switching to another provider. With a negative credit score, you should rule out financing if possible because you pay such high interest rates that a consequence must occur. A financial bottleneck. Tips to combat debt and prevent high risk sources avoid falling into the debt trap and are your chance to keep your finances in check and under control.
An overview of the biggest debt traps
Below you can find out where the biggest debt traps lurk and where your risk of getting into debt is particularly high. With our tips against debt you make the right decision and find a way out of the upcoming or already existing debt trap.
Cell phone debt trap
Cell phone debts are among the arrears, which provide for most German citizens for a negative entry in Schufa. Therefore, the cell phone debt trap is also the point you should check first. What are your monthly expenses for the cell phone contract and do you have to pay extra if you need a new cell phone?
Avoid cell phone debt by opting for an all-net flat rate and excluding another item in the cell phone debt trap that you put on the agenda when financing a smartphone. It brings little plus points, if you are in debt for a much too expensive cell phone and make the purchase possible through financing. By changing your tariff or focusing on a cheaper provider, you can avoid the cell phone debt trap and, on top of that, save a lot of money on mobile communications in the future.
Credit card debt trap
Your bank offers you a credit card and you firmly believe that the monthly credit limit is important? On the one hand you should know that the debt trap credit card is not to be underestimated. Second, possession of a credit card is recorded in Schufa, so if you are in doubt, expect your credit rating to be restricted. Credit card debt trap?
Credit cards with an annual fee can generally be avoided by opting for a free offer. You should get rid of unnecessary credit cards in favor of your credit rating. Credit card payments only become a debt trap when the credit card is used in a higher margin than you can pay off at the end of the month. Also not to be ignored are credit cards with installment facility. Here the risk of debt is particularly high.
Debt trap car – car financing despite debts
You are repaying a car finance, despite debts you have to keep paying and avoid getting a record in Schufa by repaying too late? The road to the debt trap is already paved the moment you decide to finance a car despite debt and a bad interest rate due to negative credit rating.
Have you maintained car financing despite debt for many years and are now looking for a way to make the loan more favorable through debt restructuring? The possibility exists if you are looking for a debt rescheduling that you can get for your old car financing at a favorable interest rate despite debt. Even with debt, some banks finance the switch to a cheap car loan and help you avoid the car debt trap.
Debt trap overdraft – rescheduling overdraft helps
Financial constraint? Tips against the debt trap always include a focus on an overdraft facility. Because with an interest rate in the double digits, the overdraft is a high risk for your finances. It's better to apply for a low-cost installment loan and reschedule the overdraft.
This way, the interest rate is reduced by a few percent and you no longer pay a double-digit interest charge as you would with an overdraft; instead, you can reschedule the overdraft and benefit from a noticeable interest savings. The same tips against debt should be taken to heart with any other loan, and look for an option where you can finance despite existing debt and use debt restructuring to pay off too-expensive debt.
Don't go into debt in the first place – finance with thought and consideration!
The debt trap doesn't build up literally overnight. Long time before real cell phone debt or the debt trap car you notice that paying off monthly debts is becoming increasingly difficult. If this point is reached, you should act quickly and avoid the debt trap.
To prevent a financial shortfall – tips can be found in this article – from becoming a mountain of debt and a negative influence for your credit rating, calculate your options and existing debt. You can always avoid canceling unnecessary insurance policies, falling into credit card debt traps, or paying too much for your cell phone, and you can do a great job of optimizing them by rescheduling your contracts and liabilities.