The process of binding information from different modalities and sources into an object is ubiquitous in cognition and has been a problem for research and modelling efforts in psychology. This process has been considered by most researchers as necessarily always beneficial to memory. In the present study we provide evidence that binding can be detrimental through the propagation of vulnerabilities to interference. Phonologically similar and dissimilar letters were presented sequentially at different locations on a computer monitor. Participants had to recall either the letters in their order of presentation or the spatial locations at which the letters had appeared. Whether binding was encouraged or not—providing prior knowledge of which dimension to remember—phonological similarity had a detrimental effect on recall of locations. Such a finding poses a challenge to the view that binding is the panacea in enhancing memory capacity.