Debt charity sees calls from people with payday loan problems double in a year - and some callers have taken 80 loans

The amount of people seeking advice about payday loans has almost doubled in a year, according to new figures from a debt charity.
The National Debtline Service said that it took over 20,000 calls from people looking for help with pay day loan debts last year – up 94 per cent from 10,301 in 2010.
It said it now receives 100 calls everyday from people with payday loan debts and that some callers had taken out ‘as many as 80 such loans’. It is common for those with payday debts to take new loans in order to clear existing ones, creating a cycle of borrowing that is hard to escape. 

Money troubles: Some callers to the National Debtline Service have up to 80 payday loans - the charity has seen the number of calls double in the space of a year.

The volume of consumers with money worries continues to rise and the charity said that one in every seven calls they received in January were about payday loans.
Payday loans are designed to be a short term solution to a lack of cash until the next pay cheque – but they often come at extraordinary cost of more than 4000 per cent APR.
National Debtline said the number of calls about payday loans has risen by 4,200 per cent since the onset of the financial crisis in 2007.

 

Joanna Elson, chief executive of the Money Advice Trust, said: ‘Payday loans have come from nowhere to be one of the most common debt problems people face. In 2007 as the financial crisis began National Debtline took just 465 calls for help with payday loans, but last year that figure had grown to 20,013.
'National Debtline advisers help around 100 people every day to deal with payday loan debts, some callers have taken out as many as 80 such loans. Borrowing on this scale can have serious ramifications if not dealt with properly, and advice services like National Debtline risk becoming over burdened by the proliferation of payday loans.’

Adding up: If debt worries get you down then you must seek advice. The Money Advice Trust is calling on the OFT to shut down lenders using bad practices.

National Debtline is part of debt charity Money Advice Trust. It is calling on the Office of Fair Trading (OFT) to suspend consumer credit licences where it identifies persistent bad practice.
Earlier this month the OFT was given the power to immediately stop companies from trading to protect consumer if it believes they are using practices that are deceitful, oppressive or unfair.
These include firms pushing inflated fees and charges, continuing to take money when debts have been repaid, harassment over repayment of debts and chasing people for loans when the individual didn’t apply for a loan in the first place.
Earlier this month Citizens Advice sent a complaint to the OFT about four pay day lenders, including two ‘household names’, which it believes have been causing 'significant distress' to customers.
The CAB said it could not name the firms involved as it said it may damage the investigation and the OFT has yet to respond publically to the complaint.
In November the OFT wrote to 240 payday lenders to warn them of on-going bad practices in the sector as part of its review.
Russell Hamblin Boone, Chief Executive of the Consumer Finance Association, which represents a number of payday lenders, said: 'The short term lending industry has seen exponential growth in recent years, so an increase in calls does not mean that problems relating to payday are getting worse.
'Our members have been actively referring customers to them as a part of our commitment to supporting those who find themselves in financial difficulty. As a matter of course our members will freeze interest and charges, negotiate repayment plans and refer people to third party advice.
'As responsible lenders we fully support National Debtline’s call to rid the industry of the poor practice and consumer detriment highlighted in their report.'

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