Young people are experiencing the greatest increase in exposure to financial difficulties arising from high-interest payday loans, according to a debt charity. StepChange – formerly the Consumer Credit Counselling Service – reports that, in 2012, 42% of its clients under the age of 25 had problems with payday loans. This is upRead More
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.