Weekly payday roundup: 7 days ended 25 Jan 2013:
With this week marking the one-month anniversary of Christmas Day, campaigners warn that festive season debt from payday loan providers has come home to roost.
If you took out an expensive payday advance the week of Christmas, you’re most likely required to repay the loan this week, according to Coast & Country, a social housing provider. In fact, C&C found that 24 December is traditionally the day most often cited as one where high interest rate short term loans feature heavily. A large proportion of people were paid that day, leading to a long five and half weeks until their next pay cheque on 31 January.
The Teesside-based housing and regeneration firm said that it wanted to draw attention away from large scale television advert campaigns such as those kicked off by lenders such as Wonga and QuickQuid during the festive season and beyond. Instead, C&C’s chief executive Iain Sim said that borrowers should look into less expensive borrowing solutions such as credit unions, especially since the cost of living seems to be constantly on the rise and households are also facing struggles meeting ends, what with the costs of electricity, gas, food, and petrol continue to run rampant.
January is even more dangerous than most months when it comes to household finances, remarked Mr Sim, as so many individuals may have taken out payday lending in order to finance their festive season spending. However, with interest rates on payday loans resulting in such large fees at repayment deadline, many households find themselves in hot water when it comes to clearing their payday related debt and also paying the rest of their regular monthly bills.
However, turning to a credit union may indeed be the answer for many, especially since it is guaranteed to be much less expensive to take out a loan from such a lender. Credit unions are bound by law to only charge 2 per cent in monthly interest or less on all their loans, after all, which means that repaying a credit union loan is much less painful than repaying a payday loan!