How to Avoid Debt and Invisible Money

Money News | by | 25th Apr 2016

Lego man eating coins for 'how to avoid debt' blog post

Trying to keep track of your money can be difficult. When hidden charges, high interest rates and invisible money are involved, it can be even harder to keep cash in the bank. 

It’s important to steer clear of the pitfalls of invisible money and understand how to avoid debt without causing more. Invisible money is what you might call ‘hidden’ or ‘secret’ charges from companies or individuals.

Knowing how to avoid it is essential. Thankfully, there are plenty of places that can give you advice on getting your head around it all.

payday loans in how to avoid debt

Payday Loans

Payday loans are small loans, usually less than £1,000, that are paid back over a short period of time. This means that you would be expected to start paying back the loan in a matter of days or weeks, rather than over years like a traditional loan.

Payday loans can seem like a solution to being strapped for cash at the end of the month, but they usually cause more problems than they solve. This is because they often come with high interest rates, so you’ll be paying back more money than you borrowed, and if you can’t pay back on time the costs soon stack up.

UK debt charity Step Change, who offer free and impartial debt advice, recommend avoiding payday loans and looking into other options (such as contacting your local credit union, asking for help from loved ones or selling unwanted items) before taking one out. They also have a payday loan calculator so you can see exactly how much you would need to pay back.

Loan sharks in how to avoid debt

Loan Sharks

If you’re imagining a Jaws happily handing out fin-fulls of cash to those that ask, you’ll be sorely disappointed. Loan sharks are simply people who lend money illegally, meaning they don’t have a licence to do so.

They might not have a set of sharp teeth but they can be dangerous. As they are working illegally, they can charge you extremely high rates, force you to take out new debts to pay off old ones and even use harassment and violence against you.

The Money Advice Service has lots of advice on how to spot a loan shark and what to do if you become involved with them; you can also call them (for free) for advice on how to avoid debt on 0800 138 7777.

How to avoid debt and dangerous situations like pawn shops


Pawnbrokers, who often operate out of pawn shops, give loans to people and take a valuable item (such as jewellery or electronics) as insurance. This means that if you can pay back your loan, you will get your valuable items back in return. It also means that you won’t be hassled for money if you can’t pay, as the pawnbroker will keep the item and sell it instead.

Pawning your valuable items can be an expensive way of borrowing money, and a common problem is that most pawnbrokers will only give you a fraction of what your item is worth. So if you pawn a ring worth £100, you may only be able to borrow £50. Some pawnbrokers might also charge you more to return your item than they originally paid for it, costing you money in the long run.

The Money Advice Service explores the pros and cons of pawn shop loans, and suggests some alternative options.

hidden charges in how to avoid debt

Hidden Charges


There’s nothing worse than looking through your bills and seeing you’ve been charged for something you weren’t expecting.

If you have a regular bill, such as a phone bill, its important to ask for an itemized bill. This way you can see a breakdown of what you’ve been charged for and see if there is anything listed that you don’t think belongs there (some mobile phone companies have been known to try and charge you for messages you haven’t sent, or to continue to bill you after you’ve cancelled your contract). If you think they are charging you unfairly then call your phone provider and ask them to explain it.

Premium phone rates

Make sure to check how much that phonecall will cost you, however, as premium phone-lines can burn a surprisingly big hole in your pocket. At first, a 12p-per-minute phone number doesn’t sound like much, but if you are kept on hold for long periods it soon adds up. The most expensive phone-lines to look out for are business rate numbers (that start along the lines of 0843 or 0871), which can charge up to 57p for a call from a mobile, and premium rate numbers (which start with 09) which can charge up to £4 a minute.

If you find that your budget has been ruined by unexpected charges then don’t panic. You can contact National Debtline for free advice on 0808 808 4000 or call Family Point’s own helpline on 0300 222 57 57.

Have you been affected by debt or ‘invisible money’? Get in touch to share your story.

Like this post? See our other articles about money-related issues:

If you’d like to chat about money issues or family matters, get in touch with the FamilyPoint Cymru helpline.

  • Phone: 0300 222 57 57
  • Text: 07860 052 905
  • Instant message (see top of page)

We are open 6pm – 10pm Monday to Thursday and 10am – 2pm Friday & Saturday.

(Featured image: William Warby, from Flickr)

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