Don't fall in this trap : consumer credit

How it works, its traps, and how to protect yourself from it ?

Like many young professionals, i used to believe that a loan was merely a temporary bridge, a simple way to buy time until the next paycheck or to access something you felt you “deserved” but couldn’t quite afford yet. Furniture, a new phone, a vacation, even unexpected expenses, all were made easier with a few clicks, a signature, and a friendly banker.

Bank of Ireland

I experienced this myself when I was still a student, trying to get through the final year of my Master’s degree… I was convinced I would find a job easily and quickly. So, I went to my banker and asked for a $2,500 consumer loan to buy an iMac (which I still use today for my personal business, nearly seven years later).

Back then, I mustered the courage to see the banker because, in my old social circle, people were accustomed to taking out loans for everything, buying the latest sneakers, purchasing a used car to show off in the neighborhood, paying for their wedding, Christmas presents. Deep down, I knew this behavior wasn’t sustainable, but with youth and the constant repetition of this sorry spectacle, I eventually cracked. I was no longer afraid, precisely because I saw everyone else doing it so repeatedly and with such courage and confidence.

I thought, “Why not me? After all, it makes life easier. They’re just lending me money I don’t have yet, and I can pay it back at my own pace.”

It was actually quite fun; I had discovered a new playing field where I could keep up with my peers without being the ‘has-been’ friend, the one who was out of touch.

In any case, I used it rather cautiously to buy that iMac, which, as I mentioned, still serves me well today.

I walked into the bank to see the banker I had made a point of befriending, his name was Zach (today, he’s a Deputy or Branch Manager, a impressive progression for a guy who once told me he’d stumbled into the job and had cribbed his cover letter from the internet, only to get hired. That guy has really made his way and progressed brilliantly. Bravo, Zach).

He welcomed me in, I explained my project, and everything went smoothly. He then approved the loan on the spot and said one sentence that has been etched in my mind ever since: "Anyway, Jean-Paul, you're finishing your studies; with your business school profile, you'll find a job easily."

When he uttered those words, doubt and fear suddenly seized me... I'm not entirely sure why... I started repaying a small fortune (for a student) the very next month (the interest was enormous it took me about 2 or 3 years to pay it off). This repayment was eating into the salary I earned as an apprentice at a company, barely $1,400 a month, with rent of $950 and habits like eating out and spending money every single day (life as a young person in Paris didn’t help, you have to socialize, after all).

Once my studies ended (and with it, my apprenticeship contract), I struggled tremendously to find my first job. It was a real battle, filled with so many obstacles that I was almost ready to take a job at the local McDonald's. Thanks to meaningful connections and wise advice, I managed to land a position as a financial analyst at a pharmaceutical laboratory. 

It was then that I was finally able to pay off my debt completely.

I can’t even describe the emotions I went through. Having a debt taken on for a tool that was certainly useful, but which I may have overpaid for out of a need for recognition, to show off to friends, was costing me my financial well-being.

Nevertheless, I had decided to see it through, betting once again on my good luck, telling myself that I would find something eventually... Psychologically, it was one of the toughest situations, especially when you have a residence permit that is tied to you finding a job within a maximum of one year after graduating.

In short, this experience taught me a valuable lesson in financial management. I realized that I had almost become a prisoner of the small loan I had taken out, overconfident in my ability to repay it, betting on a future I had no control over. Nonetheless, it allowed me to understand how consumer credit works from every angle.

Here is the reality : consumer credit isn’t just about borrowing money. It’s a business model designed to keep you paying, stressed, and in many cases, stuck for years, sometimes for life.

The consumer credit volcano

The unvarnished truth about how consumer credit works

On the surface, consumer loans appear harmless, a straightforward transaction where you borrow money, make regular payments, and life goes on. But beneath this facade, banks and lenders operate on a fundamental truth that most borrowers miss : their profitability is often tied to your long-term debt.

The mechanics of the debt cycle:

• The illusion of affordability: a seemingly manageable monthly payment obscures the total cost. Thanks to compounding interest, you can easily end up paying back double the original amount borrowed.

• The enticement of increasing limits: the more you borrow, the more credit companies may offer to increase your limits. This feels like a reward but functions as a chain, encouraging you to dig a deeper financial hole.

• The minimum payment trap: making only the minimum payment is a designed trap. It can extend your debt for decades, maximizing the interest you pay while minimizing the principal you reduce.

This system is not flawed by accident; it is by design. Banks profit from borrowers who pay slowly. Delayed payments, extended credit, and refinancing translate into guaranteed interest, higher fees, and lifelong customers.

The psychological weight of debt

Debt is more than a number on a statement; it’s a constant mental burden. Many individuals describe its symptoms: sleepless nights, guilt after any purchase, and anxiety at the sight of a bank notification.

Debt creates a sense of being “owned.” Even as you work, a portion of your future income is already claimed before it reaches you. This pressure doesn’t just drain your wallet; it erodes your confidence, stifles your creativity, and can even strain personal relationships.

The impact can also be intergenerational. In some cases, debt becomes a family burden, passed on and perpetuating a cycle of financial strain. What was marketed as “flexibility” can become a legacy of struggle.

How to shield yourself and reclaim control

Protecting yourself requires shifting from a borrower’s mindset to a strategist’s:

1. Understand the true cost: before accepting any credit, calculate the total cost of the Loan, not just the monthly installment.

2. Reject the minimum payment: avoid this trap at all costs. If you cannot pay significantly more than the minimum, you cannot afford the loan.

3. Borrow strategically, not emotionally: use credit for value-appreciating assets or opportunities (like education or a business), not for fleeting consumption.

4. Build your financial foundation: the ultimate defense is independence. Cultivate an emergency fund. The less you rely on credit, the more control you have over your life and choices.

An example to explore the hidden trap of consumer debt

Imagine you want to buy a new TV for $2,500. You don’t have the cash, so you put it on a consumer credit card.

1. Interest compounds quietly

• Credit card APR: 20%

• You think: “It’s just a small monthly payment; I’ll pay it off eventually.”

• Reality: If you only pay $100 a month, the debt will last over 3 years, and you’ll pay around $1,200 in interest.

  • That $2,500 TV ends up costing you $3,700.

2. Limits keep increasing

• After a few months of payments, the bank “rewards” you by raising your credit limit from $3,000 to $5,000.

• You feel richer and use the credit to buy new furniture for $1,500.

• Now your total balance is $4,000, not $2,500.

  • What felt like “freedom” is actually a heavier chain, tying you to more debt.

3. Minimum payments are a trap

• Your credit card statement says: “Minimum due: $75.”

• Paying the minimum keeps you in “good standing” with the bank, but:

  • At $75/month, it would take you over 10 years to pay off the $4,000.

  • Total interest paid: more than $5,000.

  • That initial $2,500 TV could ultimately end up costing you $7,000–8,000.

Breaking free begins with awareness. When you understand the rules of the game, you can refuse to play.

By building financial discipline, you reclaim more than just your money, you reclaim your peace of mind and the autonomy to decide how your life is lived.

Because ultimately, debt isn’t just about what you owe; it’s about how much of your future you truly own.

About me

I’m a former strategy and management consultant who decided to shift paths and create Learn Corporate with a clear mission: to help employees stop depending solely on their salary and instead use it as a lever for freedom in today’s new economy.

Since 2018, I’ve been developing and refining a method that has already helped many people regain control of their finances and ultimately, their lives. This approach, tested in real situations, is now available through ​​​​www.learncorporate.com​​​​, where I’ve translated my method into a practical tool for anyone ready to take charge of their financial future.

Alongside this, I host​The Financial Marathon​ podcast, where I give the floor to experts and practitioners who shed light on the challenges of the new economy, artificial intelligence, and the importance of financial literacy.

My goal is simple: to empower you to navigate uncertainty with confidence, and to build a life that is no longer limited by a paycheck.

Thank you for taking the time to read this.

Jean-Paul Junior Kimpalou​