The most indebted Christmas ever - Payday lenders targeting the poor over festive period
The Office of Fair Trading has supported The
Independent’s campaign to crack down on unscrupulous payday lenders who target
vulnerable people at Christmas.
Meanwhile a new survey published revealed that the situation is reaching crisis point with more than 5m people expected to turn to expensive short-term credit in the next few months.
The survey by insolvency firm R3 reports that one in 10 people who use payday loans is forced to choose to pay back the loans and extortionate interest rather than use their cash to buy food.
Even more frightening is the fact that one in three payday loans is taken out to pay for other payday loans.
David Fisher, Director of Credit, at the OFT, said: “We expect payday firms to be responsible, making sure they only lend to those who are able to repay the debt. We would be particularly concerned if payday lenders were deliberately targeting vulnerable consumers.”
Co-operative Labour MP Stella Creasey, who has campaigned against what she calls legal loan sharks, said: “The public know these loans are toxic, but what choice do they have when they’re trying to keep a roof above their heads or pay to get to work?
“I warned ministers in 2010 that they were facing a debt crisis if they didn’t stop these companies exploiting our lax credit regulation. In two years they have done nothing and millions more are now facing a debt-laden Christmas and New Year.”
Our evidence published today revealed that many aggressive lenders are planning to cash-in on struggling people this Christmas by encouraging them to take out expensive short-term credit.
In many websites that have sprung up in recent weeks hoping to make an easy profit, typical messages suggest people "join in the holiday festivities without a second thought to the cash in your bank account."
But outrageous charges on the short-term loans soar to 4,248.9 per cent APR.
Neera Sharma, assistant director of policy at children’s charity Barnardo’s said: “The families we work with struggle more at Christmas. They’re on very tight incomes and are forced to get by on just £12 a day. If they’re encouraged to take out a payday loan, they very quickly end up on a cycle of debt.”
Una Farrell of the Step Change Debt Charity says there has been a steep rise in payday loans problems among those seeking its help.
“While payday loans are an expensive form of credit to begin with, that is only part of the problem,” she said. “Expensive roll-over charges mean that they can quickly spiral into unmanageable debt if a borrower cannot repay what they owe at the end of the month.”
Another growing problem is the fact that borrowers are often allowed to take out multiple payday loans. “The issue of multiple lending needs to be addressed to prevent people falling into these destructive debt cycles,” said Ms Farrell.
The OFT is in a middle of an investigation into some of the dodgier practices used by the payday lending and high-cost credit industry. In particular it is examining accusations of irresponsible lending and pushy marketing and is expected to announce tougher new rules next Spring.
Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents some of the leading short-term lenders, said: “We recently issued advice to consumer considering taking out a payday loan to fund their festivities. In essence it said, if you can’t afford to borrow, don’t take out a loan. Sound advice indeed.”
Ami Jarman racked up debts of £14,000 in three years after falling into a desperate debt cycle with payday loans.
The 22-year-old healthcare worker from Hertfordshire originally borrowed just £100 to help get a new tyre for her car in 2009 when she was 19.
But it was so easy to borrow the cash that she quickly came to rely on it, but borrowed more each month to cover the interest.
“The problem is that it’s so easy to get the money, you just fill in a few forms and it’s in your account the same day,” she says.
“Since 2009, I have borrowed a little shy of £8,000 and I have paid back just under £14,000,” she admits. I started thinking about what I could have done with that money and soon wished I hadn’t.”
Eventually she admitted her problem to her family who have helped her and she’s written a blog – at amiiiiiiiiii.wordpress.com - to help other people avoid getting into the same problems she had.
Is 31 May really the day when we have paid all of our tax for the year?
Women born in 1950s facing severe financial hardship over pensions could have fates changed by Ros Altmann - should she choose to help
Five Questions On: GB Energy's new tariff
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Bank-beating exchange rates on your international payments
- 3 Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
- 4 Ann Summers survey reveals the UK's favourite sex position
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
Day In a Page
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool