THERE’S been a “worrying rise” in the number of people turning to StepChange who are in debt to payday lenders or other short-term high cost credit providers.
The charity’s latest report reveals that the number of people with these debts has risen from 17 per cent of those who contacted it for help in 2017 to 18 per cent in 2019.
The most common type of debt is on credit card with 68 per cent of people owing cash
Average high cost credit debts have also risen by £236 from £1,519 in 2017 to £1,755 in 2018.
What’s concerning is that it is young people – a quarter (26 per cent) of women under 25 and a third (35 per cent) of men of the same age – who were most likely to have this type of debt.
The Sun has been campaigning to help the millions of families who fall prey to doorstep and legal high street loan sharks as part of its Stop The Credit Rip-Off campaign.
Since launching the campaign last March, the city watchdog has this month capped the price rent-to-own firms can charge borrowers.
Why we want to Stop The Credit Rip-OffWE never want you to pay more than double the amount you’ve borrowed – whether it’s for a new sofa or a loan to help pay your bills.That’s why The Sun launched its campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount back in March.
In a WIN for the campaign, the financial regulator has capped the fees charged by rip-off weekly payment stores from April 1 2019.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium – up to 7million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don’t stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest – more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family’s head and ended up paying back over THREE times the original amount.
It’s time to stop the credit rip-off.
But sadly people are still getting into other types of debt too.
The most common type of debt was credit cards, with two thirds (68 per cent) of people in this type of debt with an an average of £7,671 owed.
This was followed by overdrafts with almost half (47 per cent) of people in debt with an average of £1,510 owed.
The same again (47 per cent) had personal loans with a whopping £8,601 owed.
Catalogues (34 per cent of people with £1,971 owed), store cards (12 per cent of people with £1,184 owed), and home credit (12 per cent of people with £1,626 owed) were also problems.
The top three reasons for debt were unemployment or redundancy (17 per cent), injury or illness (16 per cent) or other reduced income (17 per cent).
When it comes to household bills, 36 per cent of people were behind on the basics with the most common arrears on council tax.
Overall, the charity was contacted by 657,930 new people in 2018, up from 619,946 in 2017 – a 6 per cent rise.
People owe the most debt to personal loan providers at £8,601
There has also been a particularly “notable increase” in single parents turning to the charity for help, up from 21.5 per cent in 2017 to 23 per cent in 2018.
StepChange chief executive, Phil Andrew, said: “The number of people who contacted us last year works out at one every 48 seconds – a record level of demand.
“That’s the scale of the debt problem in the UK, and our advisors hear every day the devastating impact that debt can have on people.
“While a huge amount has been done to support people in problem debt and reform credit markets, our client insight shows that there’s still much more for Government, policy makers and creditors to consider.”
NO SHAME Payday lender Peachy slammed for encouraging Brexit food stockpiling using loans RIP-OFF END Victory for The Sun as price cap on rent-to-own firms will start next month NOT SO BRIGHT BrightHouse to offer 149% interest loans as part of business shake-up NOT SO PERFECT PerfectHome rent-to-own advert BANNED for encouraging reckless borrowing HOUSE THAT Rent-to-own firm BrightHouse close 30 stores and cut 350 jobs the hard cell Payday loan broker charging 1,575% interest wants people JAILED for debts
Here’s how the new rent-to-own caps work.
It comes as millions of families are falling prey to doorstep and legal high street loan sharks.
We spoke to one mum-of-three who says she is trapped by £8,355 high cost credit debt and the poverty premium.
Struggling mum tries to feed family with £1.80 a day after 7-week Universal Credit delay left her skint
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