January 24 is Payday Loan Danger Day – a long term response to the danger is vital
As the American country music singer Marty Stuart once said, sometimes there is too much month at the end of your money. The end of January is no different – in fact there could even be more month.
With many people having received their wages before Christmas, or just after, the ability to stretch all the way until January 31st is a slog. That's why next week is debt awareness week, a time when struggling households are considering taking on more debt to supplement their wage packet.
However one housing company in the North East has made the focus of its debt awareness campaign on high cost credit. Coast and Country have called January 24 the Payday Loan Danger Day.
This is on realisation that in many communities now the growth of expensive credit products from payday lenders has replaced traditional credit products from mainstream lenders.
One analyst group recently spoke of the mid-life crisis of the credit card, while another noted that some 52 per cent of credit products on the market today are with non-traditional lenders such as payday lenders and pawnbrokers.
Carl Packman, the author of Loan Sharks: The Rise and Rise of Payday Lending, said:
"Bank closures in traditional manufacturing areas have taken place on a vastly greater scale than other more affluent areas, and this is reflected back in the sheer volume of unsecured debts.
"But use of payday loans to supplement wages should be the very last resort. Paying £25-35 in charges on a £100 loan risks entering a dangerous debt cycle. Seeking out a credit union for a loan or debt advice is the right course of action."