2 million people resort to ‘payday’ loans
Findings from R3’s latest personal debt snapshot report show that 5 million people have taken on more debt over the last few months – up from four million in the previous quarter.
According to the report, nearly half of people (46%) say they struggle to make it to payday - an increase from 44 percent in the last quarter. This equates to more than 21 million individuals across the UK. Worryingly, the results of the quarterly survey show that 2 million people have taken out a ‘payday’ loan in the last year.
R3 President, Frances Coulson comments:
“It is extremely worrying that such a large percentage of people are struggling to make it to payday and that many are using ‘payday’ loans to bridge the gap. Our members have seen an increase in the number of financial distressed individuals whose debts include ‘payday’ loans.”
“These loans tend to have high interest rates and often those who use this type of credit find themselves in a vicious debt cycle, especially if they then experience a sudden job loss. If someone is finding it difficult to pay their bills, it is good to seek financial advice before taking out further lines of credit as these stop-gap measures can exacerbate the situation.”
The number of people who are worried about their debts has increased by 8 percent from 45 percent to 53 percent. The figures reveal that those in the public sector are most likely to worry about their debts, with 66 percent expressing concern compared to 59 percent who work in the private sector.
Among those who are worried about their debts, fears about credit cards continue to dominate (48%). This is followed by overdraft and mortgage payments at 29 percent and 24 percent, respectively.
Credit card debts remain central to people’s concerns with nearly four in ten people (48%) citing credit card repayments as the reason they struggle to payday. Increasingly individuals are blaming their payday struggle on Government measures such as tax rises (21%) and welfare cuts (13%). The number of people citing spending on going out or on non-essentials as a reason for the struggle has dropped by 8 percent since January - now at 14 percent.
“Our members frequently work with individuals who rely on their credit card to make day-to-day purchases, so it is not surprising that concern over credit card debt tops everything else. It is clear that Government measures are beginning to take its toll on the nation’s finances, but the fact that the number of people spending on outings and non-essentials has dropped, suggests that people are trying to rein in their spending. As times are becoming increasingly more uncertain, it is so important that people attempt to live within their means. Unfortunately, as the cost of living rises, many won’t see their financial situation improve for a while.”
For further information please contact:
Addy Frederick, R3 Communications Officer
t: 020 7566 4217 m: 07825 679 462 e: firstname.lastname@example.org
Methodology: ComRes interviewed 2052 GB adults online between 15th and 17th of April 2011. Data were weighted to be representative demographically of all GB adults. Where population figures are mentioned, estimates have been extrapolated using the percentages from the results and adult population figures for Great Britain available from the Office of National Statistics.
R3 Press Office