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Have you ever heard the phrase “reloading” in finance terms? It’s a term lenders use to describe borrowers caught up in a cycle of incurring more and more debt. These are individuals who spend, spend, spend and eventually find themselves out of credit. They then consolidate debts by borrowing more, often by refinancing their mortgages and taking out a home equity loan.

Reloaders don’t see home equity loans as cheap loans that can help them gain a foothold as they pay off their debt. They look at them as a way to open up new credit horizons for even more spending.

If you think this sounds too crazy to be something you would ever get caught up in, consider how you treat your credit card debts. Have you ever transferred high interest credit card debt to take advantage of a 0 percent interest promotional rate? Did you then close out the original credit card account and make every effort to pay down the principle while it wasn’t accruing interest? Or, did you just keep making minimum payments or worse yet, rack up even more debt once your balance went down to zero?

Be wary of becoming a reloader, and if you’re already caught up in the spending and borrowing cycle, try credit counseling for a reality check.

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