Uncovering the Hidden Tactics that Are Keeping You in Debt


While we’d all like to believe that every financial company we deal with has our best interests at heart, we’ve learned from experience that’s not the case. Yet it can still be surprising when we encounter practices that make it harder for people to take control of their finances. For example, a recent CFPB investigation into unfair student loan lending practices shed light onto some of the sneakier ways that graduates are directed onto a track – usually unknowingly – that keeps them in debt for longer than necessary (more on this in a moment).

In other areas of finance, similarly cloudy rules and regulations do little to enlighten a borrower of their options. These hidden tactics are keeping people in higher debt for longer periods of time and the sad part is that most people may not even be aware of it. Let’s take a closer and look and find out how you can overcome these unfortunate tactics.

Student Loan Providers Are Derailing Repayment Plans

Did you know that extra cash you put towards your student loan payments may not even make it to your loan principal? Some student loan servicers default excess payments as credit for future months. This means that money you thought was going to your principal may simply be put on hold applied the next round of interest sum.

What To Do:

If you’re currently in the process of paying off your student loans, go back to the terms of your payment plan and comb through for ways you can make your payments work for you rather than against you. For example, writing to your student loan manager or lender and clarifying exactly how you want your payments to be allocated can save you big on interest over the life of your loan.


To apply excess payment to your current principle rather than towards future payments, look for and click buttons titled “Do Not Advance Due Date” or similar. Once chosen, any extra money will go towards paying down your debt rather than applied towards a future dated payment.

If you’re counting on a forgiveness program, you should also take care to understand the precise terms and rules so a missed technicality won’t leave you unable to collect on the benefits. Most require a fairly complicated (and ongoing) process that require annual check-ins and focused plan.

Get offers for lower-interest rate debt consolidation loans here on ReadyForZero!
Check your rate using ReadyForZero's free debt consolidation tool. People have saved thousands by consolidating higher-interest debts using a single, personal loan, this will not negatively impact your credit. Check Your Rate Now

Upselling/Pressure to Upgrade Is the Norm

Oftentimes, commissioned employees depend on making a sale in order to garner a higher wage. That means that they’ll pressure an upgrade or a new service (and consequently push you to the edge of your sanity) in order to meet numbers. Financial companies aren’t exempt from making these upsells and urging upgrades. If you often feel boxed into a financial decision, then you may be putting your finances at more risk than necessary.

What To Do:

It’s tough enough to say no once, but the hardest part in resisting usually comes from the string of follow-up questions asked after you try to cancel a financial service or downgrade. To avoid feeling swayed, clearly communicate your stance to anyone trying to push you into an agreement or payment you don’t feel comfortable with. Keep it simple and answer each question with a polite but firm no. If they press for more info, counter by saying that it’s a personal decision. Leave it at that. The more information they get, the more they’ll use it to push back.

Fees. Fees. And more fees.

It’s become standard to pay fees to your bank, regardless of long-time loyalty or history as a customer. Checking account fees and credit card fees are almost expected nowadays and similar financial fees are becoming just as commonplace. Unfortunately, these automated fees can sometimes take a chunk out of your bank account without your prior knowledge.


Even small monthly fees begin to add up.

What To Do:

First things first – look at your bank statements or other financial documents closely. Fees can be buried among other transactions and sometimes slip your radar even while they’re being deducted from your account. If you find a fee that you think is unfair, contact your bank. They may be able to lift the fee or recredit your account under the proper circumstances. In order to avoid future fees, make sure that you talk to your banker or servicer to clarify what requirements you have to maintain in order to avoid garnering them and/or ask about options for waiving fees entirely.

Fine Print Isn’t Getting Any Bigger

Financial documents are usually far from transparent. They’re difficult to read, poorly laid out, and rarely structured in a way that’s intended to benefit of the consumer. And while most people know the basics of finance they’re not necessarily ready or willing to sift through complicated jargon. It’s extremely important to understand what’s happening with your money, but frustrating fine print and confusing layouts don’t exactly encourage financial literacy.

What To Do:

Taking the time to understand your financial documents is essential. To magnify the fine print, sit down and look through your financial records highlighting anything that’s unclear or confusing. Next, make an appointment with your banker or a representative and ask them to clarify all the highlighted points. In this way, you can quickly pinpoint and communicate the areas of confusion and clear up the gray areas that may have been costing you. If you’re still unsure, be persistent in contacting the company sending them.

Credit Card Rewards Rely On Temptation

Whether it’s promises of free flights, cash back, or numerous other rewards, credit cards can tempt even the most frugal consumer. And while card rewards are not necessarily bad, they can sometimes lead consumers into taking on debt. To reap the benefits, you have to swipe your card and by swiping your card, you’re spending money you may not have or that you might end up paying interest on. Although credit cards can be utilized for their rewards, they can also cause undue financial stress if you’re only paying minimums. The rewards or benefits you get might easily be outweighed by the interest costs.

What To Do:

While some rewards cards can be beneficial, the only way that they’ll pay off long-term is if you pay back your debt balance each month before you’re charged interest. To help ensure that you never miss a due date, set alarms or e-mail notifications to alert and remind you. If that doesn’t work, set multiple or find an accountability buddy to help you to keep on top of the payment schedule. In many ways, banks profit from the “busyness of life.” When you don’t zero out your balance (even if you had every intention of doing so), they’re the ones who really see the rewards from a credit card.

In Conclusion

n the case of your finances, knowledge really is power. If you’re diligent in keeping up with regulations and keeping in touch with your bank accounts, you’ll be in a great position to successfully monitor the health of your finances. Further, understanding that there are sometimes less than transparent tactics that are aimed to keep you in higher debt for longer can help you to reassess your financial circumstances and create a plan that gets you on the fastest feasible track out of debt. Good luck, and don’t forget to use our financial resource centers to help answer any questions you have about dealing with credit cards, student loans, and other aspects of your finances.

Image credit: bloomua

Receive updates:      
You can always unsubscribe by clicking on the link at the bottom of each e-mail.

  • The more you know the better. That’s a sneaky trick the student loan companies are playing. Hopefully there will be some changes coming soon to student loan debt.

  • Stephen

    This is EXTREMELY helpful. Keep up the good work!!!

  • Sarah McKinney

    What can you do to ensure that Navient applies your extra payments to your principal (instead of advancing your due date)?? Their website is terrible, they do not give you the option to apply a payment to principal only. Any techniques or tactics I can use?