Money Alert: Soaring payday loan problems

The number of people struggling with payday loan debts is still rising. New figures reveal that in the first six months of this year nearly 50 per cent more people were forced to seek help after falling into debt problems because of the loans.

The debt charity StepChange reported that between January and June it advised on more than £72m worth of payday loan debt that people were having difficulty repaying, up from £51m in the first six months of 2013.

StepChange's chief executive, Mike O'Connor, said: "The figures show the payday market often fails to treat customers fairly, especially those in financial difficulty."

The charity believes there is a case for a tougher total-cost cap than 100 per cent of the value of the loan – the measure that has been proposed by the Financial Conduct Authority.

"While the FCA's proposed price cap is a crucial step forward, there is still much work to be done to ensure that payday loans can no longer plunge people into a cycle of unsustainable borrowing and entrenched financial hardship," said Mr O'Connor.