Rise in Payday Loan debt Concerning

SNP MSP for Aberdeenshire West, Dennis Robertson, has expressed concern about new data recently released by StepChange Debt Charity that shows a dramatic rise in the number of people in Aberdeenshire seeking help with their payday loans. The charity noted an increase in the number of their clients in the Aberdeenshire area seeking counselling for their payday loan debt from 13% in 2012 to 23% in the first three month of 2013. They further noted an increase in the average amount owed in the form of payday loans from £938 in 2011 to a peak of £1,916 in 2012 before settling at £1,350 in March of this year.

StepChange, which was previously known as The Consumer Credit Counselling Service, provides advice to those suffering from the burden of excessive debt. The increase in the number of their clients who were seeking help with payday loan debt was recorded in almost all of Scotland’s 32 local authority areas. Eighteen of these areas had experienced increases of 10% or more and three of those had experienced an increase of more than 20% in the last year.

StepChange’s data showed that the average monthly income of clients who were seeking help with their payday loan debt was £1,268 in 2012, but that the average amount owed by those clients was £1,665. With Annual Percentage Rates that were in some cases reported to be as high as 4,214% (The Guardian) this kind of debt can quickly become crippling and undermine the financial security of those who are unable to repay them on time.

To address the growing issue StepChange has launched a new section on its website that is dedicated to individuals seeking advice for their payday loans. It includes information about where to get help with payday loan debt, a brand new guide, the latest statistics, an informational video on payday loans, suggestions for alternative sources of credit, and a page where consumers can talk about their own payday loan experiences.

Dennis Robertson MSP said:

“The drastic rise in payday loan debt across Scotland is very troubling as this form of debt is extremely expensive and can quickly become unmanageable. Although some measures have been taken to regulate the payday loan sector the issue is currently up for debate and much more still needs to be done.”

“I would like to encourage anyone who is struggling to repay their payday loans at the end of the month to take control of their situation and seek advice from a debt charity. By allowing this type of debt to roll over consumers can quickly become overwhelmed by the aggressive penalties charged by payday loan centres.”

“Organisations like StepChange can provide individuals who do not believe that they will be able to make their payments with alternatives that can potentially save them from a flood of avoidable debt.”