- Posted April 8, 2014 by
PayDay Loans: Twice as Popular, Harder to Pay Back
In a survey polling over 2,000 Britons, payday loans outshine in popularity over traditional loans obtained from credit unions.
Approximately 4 percent of the 2,000 surveyed said that within the past six months, they had taken out a payday loan, while only 2 percent went to credit unions.
“Payday loans have become one of the default options for those trying to tide themselves over from one month to the next, but there really do need to be alternatives. While high-cost, short-term credit might be helpful in some circumstances, payday loans are not a long-term option. They only dig people struggling with debts into deeper holes,” said Phillip Sykes, deputy vice president of R3, an insolvency body.
Payday loans are a quick and easy way to get the cash you need to cover expenses until the next paycheck. It covers unexpected expenses that can’t wait for a paycheck that’s yet to.
The survey also revealed that borrowers in the age group of 25 to 34 years of age tended to use payday loans more, with about 8 percent of the group in that age bracket having taken one out at some point in time.
The research also concluded that nearly 43 percent of Britons “often or sometimes” struggled to make ends meet until the next payday, resorting to borrowing from family and friends or taking advances.
Reasons cited for falling short between paychecks were rising food costs, noted by 59 percent of respondents; rising energy bills, given by 52 percent; and rising transportation costs, noted by 38 percent.
In what seems like ever-increasing costs of living, people find themselves constantly under pressure to pay for basic essentials.
“Payday loans are marketed as an appealing short-term option, but that does not reflect reality. Paying them off in just two weeks is unaffordable for most borrowers, who become indebted long-term,” Nick Bourke, Pew Charitable Trust expert on small-dollar loans, said in a prepared statement.
The shadow consumer affairs minister and ardent campaigner against payday loans, said people who use payday loans end up “stuck in a never ending spiral of debt and misery.”