Debt isn’t always a bad thing. When it’s used wisely, it can be a powerful financial tool. But without a plan, debt can quickly become overwhelming. Many people fall into traps without even realizing it—paying unnecessary fees, overspending, or damaging their credit.

At Peoples Bank & Trust, we want to help you stay on the right path. Here are five common debt traps to look out for—and how to steer clear of them.

1. Minimum Payments Only

It’s easy to fall into the habit of paying just the minimum on your credit card. While that may keep you in good standing, it does little to reduce your actual balance—especially if interest rates are high.

What to do:

  • Pay more than the minimum whenever you can
  • Focus on paying off the highest-interest debt first
  • Avoid carrying balances from month to month if possible

2. Payday Loans and Quick Cash Offers

When cash is tight, payday loans or high-interest personal loans may seem like a solution—but they often come with aggressive fees and sky-high interest rates that trap you in a cycle of borrowing.

A better option?

  • Build an emergency fund to rely on during tough times
  • Consider a personal loan from Peoples Bank & Trust for more reasonable rates and terms

3. Buy Now, Pay Later Fatigue

Installment plans like “Buy Now, Pay Later” (BNPL) services can make big purchases more accessible—but when used too often, they can lead to overlapping debt and forgotten due dates.

Tips to stay in control:

  • Limit how many BNPL plans you have at once
  • Set reminders for payment dates
  • Treat BNPL like credit: use it only for purchases, and aim to pay early

4. Co-Signing Without a Backup Plan

Helping a loved one with a loan by co-signing can be a generous gesture—but it also comes with risk. If they miss payments or default, you’re legally responsible.

Before co-signing:

  • Make sure you can afford the payments if necessary
  • Have a repayment plan in writing
  • Check your own credit first to understand how it could be affected

5. Lifestyle Creep After a Raise

Getting a raise or bonus is exciting—but many people respond by upgrading their lifestyle right away. The problem? If your spending grows as fast as your income, you could end up in more debt than before.

Instead, try this:

  • Keep your current lifestyle
  • Increase your savings or debt payments with the extra income
  • Treat yourself—just within reason

Final Thoughts:

Debt doesn’t have to hold you back—but it does need to be managed with care. Avoiding these common traps can keep you on track to meet your financial goals.

Need help managing or consolidating your debt? Talk to the team at Peoples Bank & Trust today. We’re here to help you move forward with confidence.

Speak With a Member of Our Team

Peoples Bank & Trust Co.
Member FDIC, Equal Housing Lender
NMLS #407724