Weekly payday roundup: 7 days ended 1 Feb 2013:
New research revealed this week that payday loan providers are benefiting from the massive overdraft charges high street banks charge to their customers.
Everyone who’s anyone knows that taking out a payday advance can be an incredibly painful experience, especially when it comes to repaying the loan. Lenders such as QuickQuid and Wonga can charge more than 4,000 per cent in annualised interest on their loans, making it a very pricey proposition for borrowers – yet it’s come to light that these high interest rate short term loans are actually a bargain when it comes to overdraft charges on bank accounts in the UK!
A new investigation has revealed that you could end up paying the equivalent of an absolutely incredible 53 million per cent annualised interest rate on the use of some overdraft facilities. In fact, dipping into an overdraft on your current account in order to borrow £200 over a period of ten days would cost you three times the amount in fees as it would if you went to even the most expensive payday lender out there, and industry experts say such ridiculous fees are driving untold numbers of cash-strapped Brits right into the arms of predatory payday loan providers.
In fact, the use of unauthorised overdraft facilities generate around £2 billion on a yearly basis for the banking industry, according to an Office of Fair Trading report that was released last week. Debt campaigners are positively up in arms over these revelations, with Move Your Money’s chief executive Laura Willoughby remarking that it’s a case of ‘out of the frying pan and into the fire’ with individuals experiencing financial distress, adding that High Street is simply selling its customers short and condemning them to the heartbreak of being caught up in payday lending-related debt – which is notoriously difficult to clear.
The nerve of these high street lenders. It’s not enough that they offer savers terrible rates of return and shut down nearly every borrower that approaches them for a traditional loan – now they’ve got to ruin people’s lives even further by making payday lenders look good in comparison!