The payday loan epidemic

Research this week (4th January 2013) has highlighted the continuing struggle of families and individuals becoming unable to cover the cost of their mortgage or rent. Almost 2 out of 3 people cannot afford their housing costs, with one million of those people turning to payday loans, from companies like Wonga or KwikCash. Debt counselling charity StepChange warned recently of the growing danger of reliance on payday loans. It said that the number of people seeking help with payday loans had increased by almost 300% in the past two years. This could spell a huge future problem for property owners and letters, allowing a massive number of them to spiral into more debt, with it becoming easier than ever before. Short term creditors promise to have up to £400 put in your bank account within 20 minutes, with only your basic contact and bank account details needing to be entered on their website. It seems an easy and extremely quick way to keep on top of property payments. However, these ‘quick quids’ often make very poor financial sense. For example, Wonga offers a staggering 4214% interest on its loans, meaning if you borrow £300 until your next pay packet 28 days later, you will repay nearly £100 extra. The government has done little to protect those from being lured into this high cost trap, with many ending up in a cycle of debt that could risk them losing their homes rather than saving them. Gaeia has supported the Jubilee Debt Campaign, a charity committed to eradicating and avoiding debt. Source:   Posted by Hope Nelson CGLHPBlog/100113    

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