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Published: 21/05/2019

Credit cards and overdrafts can be incredibly useful forms of borrowing if used wisely, but if not, they can quickly become lead weights – and many borrowers unwittingly get themselves into unmanageable debt as a result.

Credit card traps

According to a study by, 67% of those who have at least one credit card believe they fully understand the implications of this form of credit and how it works, yet the evidence suggests otherwise. For example, just 24% could confidently state that they knew the applicable changes and interest rates of their card, which could mean they end up accruing more debt as a result.

Meanwhile, among those who didn’t understand the implications of having a card – which should already ring alarm bells – 72% said they didn’t realise that they’d be charged extra for withdrawing cash, and 20% didn’t realise that exceeding their credit limit or missing a payment could damage their credit score.

This all adds up to a potential debt time bomb, as if credit card borrowers don’t know how much they’re being charged for transactions – and risk additional charges for exceeding a credit limit or missing a payment – they could be getting themselves into more debt without initially realising. Not only that, but if they damage their credit score in the process, it could be even more difficult to recover.

What makes debt unmanageable?

Unfortunately, even if they rack up a far heftier credit card bill than they imagined, some may not even view themselves as being in debt. Indeed, additional research from Salary Finance reveals that almost half of respondents view having some form of debt as normal, and three in 10 believe that having a credit card, loan or overdraft is a necessary part of everyday life. 

Furthermore, many borrowers only consider themselves to be in debt once they’re £3,882 in the red, and they won’t start worrying about it until the figure hits £6,012 – while more than one in six would need to owe in excess of £10,000 before they started to seriously worry. Yet the typical amount of debt (excluding mortgages and student loans) stands at £6,936 – a level when many would start to worry – including two credit cards with a balance of £1,871, and an overdraft of £304, with one in five dipping into their overdraft in any given month.

“In today’s world it is normal for people to have some kind of debt,” said Asesh Sarkar, CEO of Salary Finance. “However, these stats are telling, in that people are not tackling their debt until it reaches thousands of pounds, and by this stage it is causing them to worry and may be difficult to control. When people fail to tackle their debt until it is of significant worry to them, they find it much more difficult to get out of a spiral … The survey shows that people should be careful they don’t take a wider acceptance of debt as a reason to get out of control with their finances.”

Asesh believes that getting into uncontrollable debt can be due to a lack of financial awareness, and if the research from is anything to go by, it could be a very valid point.

Get educated

If you’re not sure of what having a credit card (or any other kind of borrowing) entails, make sure to start boosting your knowledge. Our guides section could be a great place to start – here you’ll find everything you need to know about loans, credit cards and overdrafts, so you can go into any borrowing agreement with confidence. Just make sure you read the details of any product thoroughly so you know exactly what you’ll be charged.

Make sure to understand your credit score as well, together with how your borrowing could impact it and if you’re already in the red, read our guide on how to get debt-free in 12 steps. Ultimately, armed with some additional knowledge, hopefully you won’t unwittingly be trapped in a spiral of debt that’s difficult to escape from.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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