Young people are experiencing the greatest increase in exposure to financial difficulties arising from high-interest payday loans, according to a debt charity.
This is up from 25% in 2011, and 10% in 2010, suggesting that the proportional problem rate is approximately doubling each year at the moment.
In older age groups, the same exponential growth is repeated, albeit from a smaller starting position:
- among over-60s, payday problems rose from 1% in 2010 and 2011, to 4% in 2012;
- among 40 to 59-year-olds, from 2% in 2010 to 5% in 2011, and 11% in 2012;
- and among 25 to 39-year-olds, from 5%, to 11%, to 22%.
Delroy Corinaldi, external affairs director at the charity, says: “The under-25s are facing an unprecedented mix of high unemployment, rising living costs and a lack of access to affordable credit that means that payday loans are often seen as the only available option for the young.”
Payday loans are, of course, only intended as a short-term stop-gap solution, and must be repaid quickly if significant interest charges are to be avoided.
In a separate recent press release on the same issue, StepChange claims that its typical client now has a monthly income of £1,379; however, its average payday-loans-related client owes £1,657, meaning it would take them more than one entire pay cheque to clear what they owe.