Debt problems with payday loans more than double
Following the launch of a new payday lending customer charter, local charity, Exeter Citizens Advice Bureau, is releasing new figures demonstrating a worrying increase in the number of serious debt cases relating to payday loans.
The Citizens Advice service has seen a ten-fold increase in the proportion of clients receiving help with multiple debts which included a payday loan debt in the last four years. In the first quarter of 2009/10 only 1 per cent of CAB debt casework clients had at least one payday loan; in the same quarter last year this had risen to 4%. This year's figure has leapt to 10%.
Advice given by Exeter Citizens Advice Bureau included which debts to prioritise, a client’s right to stop payday lenders taking money straight out of their bank account and negotiating a manageable repayment plan with the lender on a client’s behalf.
Steve Barriball, Chief Executive of Exeter Citizens Advice Bureau said:
“We want our clients to help us hold payday lenders to account. For too many people payday loans are a fast but dangerous way to borrow money. Quick cash payouts can have damaging long-term consequences. In one recent case, we helped a client who was charged annual interest of 10,007.3% by one company.”
“We’ve seen problems relating to payday loans rise significantly over the last four years and we’re worried that this will only increase as more people feel the squeeze. Christmas can be a particularly expensive time, but with the bills due to be paid in January we urge people not to get stuck with a Christmas debt hangover and seek budgeting advice from us now.”
The Citizens Advice service is calling on people who have taken out pay day loans to take part in a national survey to monitor whether payday lenders are sticking to their self-regulating charter. The year-long survey will ask payday loan customers questions including:
- Did the lender ask you to provide documents about your personal finances and general situation to check that you could afford to pay back the loan?
- Did the lender tell you that a payday loan should not be used for long term borrowing or if you are in financial difficulty?
- Did the lender offer to freeze interest and charges for you if you make payments under a reasonable repayment plan?
The survey will run on the Citizens Advice Adviceguide website at: http://www.adviceguide.org.uk/dialogue_payday_loan_survey
Participants will also be able to fill in template letters to inform the payday loan company of their situation and experience of taking out a payday loan. Citizens Advice will report initial findings from the survey in spring 2013.
Exeter Citizens Advice Bureau is urging anyone who is experiencing difficulties with a payday loan or considering taking one out to visit the bureau and seek advice about alternatives.
