Jubilee festivities may leave hard-up families in debt
Many will be celebrating with money they haven't got, and payday lenders are happy to come up with the cash.
It's billed as the time the nation gathers together to celebrate 60 glorious years of our current Queen, but it could leave many in financial turmoil. Street parties on Monday will be full of happy smiles, but many will be putting on a brave face knowing they can't afford their party.
Estimates about how much people will blow on their festivities vary. Research from the discount website VoucherCodes suggests that people will spend an extra £102.65 over the Jubilee holiday. Meanwhile Santander reckons Brits will spend an average £83 each on food, drink and decorations for the party.
But with family debt levels increasing by three-fifths in the last year, according to Aviva, it seems clear that many will be spending money they haven't got. The insurer's Family Finances Report published this week revealed that the average family now owes £9,314.
The bulk of the debt – which has climbed 58 per cent in the last 12 months – is on credit cards, overdrafts and personal loans, but hidden away in the report is the damning statistic that the average family now owes £702 to high-cost payday lenders.
That figure is worrying as many people only turn to payday lenders as a last resort. If they owe hundreds of pounds in expensive credit, they may be on a disastrous debt spiral.
And this week shocking evidence emerged of some lenders looking to cash in on the Jubilee by encouraging people to borrow to pay for their celebratory fun.
Payday Power – which quotes an APR of 1940.5 per cent – published a Jubilee article on its website which concluded: "For anyone that doesn't want to miss out on these celebrations, applying for a payday loan could be the answer."
Meanwhile rival lender Payday Bank – which has an APR of 1,737 per cent – published its own article which suggested: "If you want to boost your Jubilee spending pot, a same day loan could provide the cash you need."
Firms encouraging people to get into debt to fund a party appear to be acting totally irresponsibly. The news brought a sharp response from one leading debt charity.
"Payday lenders should definitely not be using the Jubilee as a way of marketing their loans," said Matt Hartley of the Consumer Credit Counselling Service. "Payday loans are an extremely expensive way to borrow, and this kind of debt can quickly spiral out of control."
When the article was pointed out to Payday Bank by the BBC, it took it down and apologised, saying: "It is not up to the standards we set ourselves with regards to responsible lending and brokering."
The Independent was unable to contact Payday Power, which is a trading name of a company called MSM Credit, whose only address is a Post Office box at a Royal Mail building in Mill Hill in north London.
Meanwhile a coin expert has warned of the dangers of investing in Jubilee commemorative money. "History shows that these coins don't hold their purchase value, and because their prices are highly inflated above the metal content value, even getting close to your money back is practically impossible," warned the coin and gold dealer Lawrence Chard.
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