Star comment: Payday loans are no quick debt relief
Payday loans have become a problem for many in society. They are advertised extensively and purport to offer recipients the chance to solve their money problems. Of course, they do nothing of the sort.
Frequently, they lead to longer periods of even greater debt as interest charges mount up and people find it increasingly difficult to break free.
In Telford, there has been an increase in the number of people seeking help after accepting a loan. The Citizens Advice Bureau reported a 64 per cent jump during the first quarter of this financial year, compared to the same period last year. That is mirrored across the country, where more people have become entrapped in a spiral of debt.
There are two key messages to be observed. The first is that the general public needs to receive greater awareness and education about what pay day loans actually offer.
They are not a get-out-of-debt-quick remedy. Those who accept a loan have to pay it back, frequently at very high rates of interest.
More should be done to make people aware of what they are getting themselves into.
Though pay day loan companies are not as ruthless as the doorstep loan sharks who once preyed on society's most vulnerable, they too can be the source of high levels of stress and discomfort for people mired in financial difficulty.
The second point to observe relates to the structure of our society. While the news that our country has been lifted out of recession and is enjoying some of the best growth rates in Europe is welcome, the sad fact is an underclass exists.
Being unable to meet day-to-day living expenses such as rent, food bills and petrol to get to work sends many into a spin. The reality of an impoverished underclass is evidenced elsewhere, for instance, in the rise of importance of food banks.
Many can't afford to make ends meet and they turn to payday loan companies, little realising their troubles are just beginning. Customers need to be made aware of the realities of their debts. They need to be told clearly how interest rates rise and how much it will cost.
But we also need to be aware that too many people struggle on the breadline.
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