📌 Definition:

A debt trap happens when a person keeps borrowing money to repay existing debt.

Over time, interest payments grow faster than income, making repayment difficult.

💳 Common causes of debt traps:

• high-interest loans

• credit card debt

• overspending

• medical emergencies

• poor financial planning

📈 How debt traps grow:

Borrow money

→ interest increases

→ monthly payments grow

→ new borrowing begins

→ debt cycle repeats

💡 Example:

A person uses credit cards for expenses they cannot afford.

When bills become too high, they take personal loans to repay cards.

Debt keeps growing.

⚠️ Warning signs:

• paying minimum balances only

• borrowing for essentials

• multiple loan repayments

• no emergency savings

✅ How to avoid debt traps:

• build emergency funds

• avoid unnecessary borrowing

• pay high-interest debt faster

• track expenses

✨ Key Takeaway:

Debt can solve short-term problems

But unmanaged debt can create long-term financial stress.