Britons prioritise debt over food, according to research

Up to five million Britons would consider taking out a payday loan within the next six months, while borrowers are prioritising paying back the debt over essentials such as food and heating, according to research from insolvency trade body, R3.

The study found that since this time last year, there has been around a 50 per cent rise in the number of adults admitting to contemplating a payday loan in the near future, an increase from 3.5 million to 5 million.

A total of 12 per cent of 18 to 24 year olds who have acquired payday loans have prioritised paying back the debt over buying food.

Recently, consumer rights group Which? said it had found that almost 40 per cent of payday loans are taken out to buy basics such as food, while 32 per cent of those who take out such loans do so to pay bills, with a fifth using the finance to pay bills.

Payday loan companies legally charge interest rates of 4,000 per cent a year and the industry has grown to ?3.5 billion a year since the recession hit.

R3, the trade body for Insolvency Professionals who conducted the research, said their new research showed the ?payday loan can no longer be regarded as a niche form of credit.?

Stella Creasy, Labour MP for Walthamstow, is an active campaigner for regulation of payday loan companies. She said: ?I look at these figures in sorrow more than anger.

?I have been warning the government for two and a half years, that when wages don?t cover the cost of living, this is the consequence, people borrowing in this very toxic way, and because of the high interest rates and the way these products are marketed, they are getting themselves into more and more debt.

?These figures are particularly shocking because they show people are choosing to pay back loans rather than feed themselves. They are borrowing for the basics, they are borrowing to feed themselves and get drawn into a spiral.

?The time for self-regulation is more than over, the government really needs to get a grip and back all the measures about capping the cost of credit before this debt tsunami engulfs whole sections of Britain.?

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Source: http://www.themoneypages.com/latest-news/britons-prioritise-debt-food-research/

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