Weekly payday roundup: 7 days ended 15 Feb 2013:
Thanks to impending welfare and benefit reforms, the number of households sinking into debt is more than likely to skyrocket sometime in the immediate future.
That’s what debt charities have been saying recently, as these organisations look ahead to the bleak economic landscape stretching ahead of us to the horizon. Unfortunately, the likelihood of lower income earning families – the very same households who rely upon benefits in order to help meet ends – are going to be hung out to dry thanks to the changes; the results will likely be bad as countless households begin to flock to expensive, high cost payday lenders like Wonga and QuickQuid in an attempt to squeak by from month to month.
And make no bones about it, debt charities say: payday loan related debt is absolutely on the rise already. Payday loan debt related problems have doubled just over the course of 2012 – even wore, the last four years have seen a massive tenfold increase!
Citizens Advice in particular is quite worried, and it has ample reason. Only 1 per cent of its clients had payday loan debt in 2010, yet 2012 saw this figure raise to 4 per cent – and today so far the figure stands at an absolutely astounding one out of every ten.
Meanwhile, things are only going to get worse, says the debt charity, once the April benefits cap goes into effect and some 67,000 Brits will have £83 less every week to help them meet ends on average. Meanwhile, housing allowance changes that will penalise households by up to 25 per cent for having as many as two spare rooms in their home could cripple as many as 670,000 of the most vulnerable British families.
This will most likely cause a massive storm of debt as people end up scrambling to pay their bills, especially when they were just barely making it beforehand. The allure of instant cash loans from payday lenders may be too much for these vulnerable households, and while the short-term benefits of a payday loan may be an excellent way to meet a sudden, one-time expense, payday loan related debt is absolutely unsustainable in the long run and will lead to even more debt for even more families.