The Credit Card Trap with Iona Bain
Credit cards can feel helpful, even sensible. They offer flexibility, consumer protection, and a way to smooth out spending. But as this episode of The Wallet shows, they can also quietly turn into long-term debt that is hard to escape.
In this conversation, Emilie Bellet is joined by Iona Bain, award-winning broadcaster, columnist, and author, following her Panorama investigation Maxed Out: The Credit Card Trap. Together, they explore how credit card debt really builds up, why so many people get stuck paying it for years, and what makes this problem so common.
This is not a story about being “bad with money”. It is about how credit products are designed, how human behaviour works, and how life rarely stays predictable.
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What is the “credit card trap”?
Iona explains that most people take out credit cards with good intentions. They might want:
consumer protection on purchases
to borrow for a specific, short-term cost
to build their credit score
or simply to manage cash flow
At the start, many people do pay their balance in full. The problem comes when life changes. A job loss, illness, divorce, or rising living costs can slowly push more spending onto the card. The balance grows. What once felt under control starts to drift.
This is how people end up in what is known as persistent credit card debt, where they are only able to make the minimum payments over a long period of time. In the UK, around 2.8 million people are in this situation. They are not really paying the debt off, they are just keeping their head above water.
Why minimum payments are such a big problem
One of the strongest themes in the episode is the danger of minimum repayments.
Seeing a “minimum payment” on your statement creates a powerful psychological effect. It feels like the amount you are supposed to pay. This is known as anchoring. When a number is suggested to us, we naturally treat it as a guide.
The issue is that minimum payments are not designed to clear your debt quickly. They are designed to keep the account running.
If you only pay the minimum:
interest keeps building
the balance falls very slowly
the total cost of the debt rises
the repayment period can stretch into many years, sometimes decades
Statements do usually warn about this, but many people still underestimate what it means in real life, especially when money is tight and paying more feels impossible.
Credit card debt is increasingly about essentials
Another important point from Iona’s investigation is how people are using credit cards today.
There is a common idea that credit card debt comes from overspending on treats or impulse purchases. In reality, more and more people are using credit cards to pay for essentials, including:
food
energy bills
everyday living costs
Some people are also moving “buy now, pay later” balances onto credit cards, which can hide the true size of their debts.
This changes the story. For many households, this is not about lack of discipline. It is about pressure on incomes and rising costs making credit feel like the only option.
Credit limits quietly make debt harder to escape
One of the biggest risk factors Iona saw in her research was rising credit limits.
Many credit card providers automatically increase limits after a period of on-time payments. It can feel like a reward, or a sign that the lender thinks you can afford more.
But higher limits:
make it easier to spend more
make balances harder to clear
increase the chance of getting stuck paying interest long-term
Iona explains that lenders do not want customers to pay off their balance in full every month, because that means no interest. But they also do not want people to default. The profitable “sweet spot” is when customers keep carrying a balance and paying interest.
This is why opting out of automatic credit limit increases can be such a smart defensive move, even for people who consider themselves careful with money.
Are 0% balance transfers really the solution?
Balance transfer deals often get presented as the fix for credit card debt. And they can help, in the right circumstances.
But Iona is clear that they are not a cure-all.
Many people:
do not clear the balance before the 0% period ends
underestimate how much they need to repay each month
experience life changes during the 18 to 24 month window
end up back on interest and stuck again
Without a realistic repayment plan and a budget that supports it, a balance transfer can become a pause rather than a way out.
Do you actually need a credit card to build a credit score?
A common myth is that you must have a credit card to get a good credit score or a mortgage.
In reality, your credit history can also be built by:
being on the electoral register
paying bills on time
managing a phone contract or similar commitments
A credit card can help some people, but it is not the only route. This matters, especially for people who are wary of credit because of past experiences with debt.
That said, credit cards do have legitimate uses. One example discussed in the episode is Section 75 protection, which gives extra consumer protection on purchases over £100. For some people, credit cards are also a practical cash flow tool. The key is having clear rules for how you use them and a plan to clear the balance.
The emotional cost of long-term debt
One of the most powerful parts of this conversation is about shame.
Many people feel embarrassed about debt. They avoid opening letters. They keep it to themselves. They feel isolated. This emotional weight can be as heavy as the financial cost, and it often keeps people stuck for years.
Iona stresses that needing help is not a failure. Persistent minimum payments are a sign that the debt may be unaffordable. Getting support, from a debt charity or an adviser, can be the turning point, even if it feels frightening at first.
The simplest protection is also the least exciting
There is no clever trick that beats the basics.
The habit that protects most people is simple visibility:
knowing what comes in
knowing what goes out
knowing what your credit card spending is really doing
Budgeting is not about perfection. It is about staying aware, so “manageable” does not quietly turn into something that follows you for years.
The bigger message
Credit cards are powerful tools. But they are designed in a way that makes long-term debt easy to fall into, especially when life gets harder.
Understanding how minimum payments, credit limits, and interest really work is not about fear. It is about staying in control before the trap closes slowly and quietly around you.
Resources
Instagram @ionajbain
Website Iona Bain
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