rollover debt
Extending or renewing a loan at maturity rather than repaying it — common in payday loans where fees compound.
Example
“Each payday loan rollover added $75 in fees and extended the debt another two weeks.”
Memory Tip
ROLLOVER — the debt keeps rolling forward. Fees pile up with each extension.
Why It Matters
Rollover debt is critical to understand because it can trap you in a cycle of increasing financial obligation. When you roll over a loan instead of repaying it, you are typically charged additional fees and interest, making your total debt burden grow even though you have not borrowed any new money.
Common Misconception
Many people believe that rolling over a loan is a free extension that simply delays payment without consequences. In reality, rollover debt almost always comes with significant fees and interest charges that make the original debt substantially more expensive and harder to escape.
In Practice
A person borrows 300 dollars through a payday loan with a 15 percent fee due in two weeks. Unable to repay, they roll over the loan for another two weeks, adding another 45 dollar fee. After rolling over three times, they still owe the original 300 dollars but have paid 135 dollars in fees alone, turning a 300 dollar loan into a 435 dollar financial burden.
Etymology
From Old English 'rollen' meaning to roll — the debt rolls forward instead of being resolved.
Common Misspellings
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