One of the top debt charities in the UK has warned that payday lenders are forcing increasing numbers of people into unmanageable levels of payday loan debt.
The Consumer Credit Counselling Service has said that the number of customers who are have debts they cannot afford to pay, is much higher compared to the same time last year and, in many cases, this is due to payday loans.
CCCS has published its data for the year so far, which reveals that 16,500 individuals have been in contact with the organisation for help relating to payday loans. With a further three months of the year yet to pass, the total for 2012 looks certain to break the 17,500 peak it reached last year. It is already way beyond the 6500 mark, which was the total number with payday loan problems in 2009.
Payday loans are intended as a form of emergency borrowing which are designed only to last until payday – hence their name. However, with many people unable to access mainstream credit, payday loans are being used by individuals who cannot afford to pay them back, creating a cycle of unmanageable debt. CCCS said they are seeing cases where people have multiple payday loans simultaneously, in some cases more than 10 at once.
And it isn’t just the total volume of the cases which are increasing; the value of the debt is also climbing. In the past three years, the average balance has risen by around 25%, with the typical amount owed now in the region of £1,458.
The Office of Fair Trading is currently carrying out an investigation into the payday lending industry and has said it hopes to be in a position to publish its findings before the end of the year.