The Citizens’ Advice Bureau for East Durham is looking to block the opening of a payday advance shop due to concerns over short term loans creating more debt for UK households already feeling the squeeze due to the current economy.
The CAB has raised objections to The Money Shop’s new planning application, which seeks to move into the Castle Dene Shopping Centre in Peterlee at the one-time site of an old Claire’s Accessories store. Also based in the shoppingcentre, the CAB has taken issue with the firm’s services, saying that the risk of rising debt due problems paying back instant cash loans is too great.
Neil Bradbury, chief executive for East Durham CAB, remarked that he believed people are not given any debt management aid when it comes to such initiatives but are actually moved from the frying pan into the fire. The charity was concerned by the number of credit shops springing up within Peterlee, Mr Bradbury also said, stating that their numbers are reaching ‘unsustainable’ levels.
Providers of short term loans are not the only firms to come under fire by the CAB, as the chief executive also said that the number of firms operating pawnbrokers and cash-for-gold purchasing schemes are also rising too rapidly. The number of debt problems that originated from or were exacerbated such situations have risen by 50 per cent over the past few months, Mr Bradbury also said.
The CAB chief executive did say that short term loans are useful in many situations, such as a financial emergency where a borrower needs immediate cash, yet is stuck between pay cheques. However, Mr Bradbury voiced concerns that Brits availing themselves of the services are not solving their financial problems and just using the loans to ‘push money around.’