Young people turn to payday loans for Christmas
Wednesday, 07 December 2011 09:00
As pressures on household finances continue, Britons are increasingly turning to payday loans in order to cover the cost of Christmas.
Also called microloans, these are short-term, unsecured loans designed to tide people over until their next pay slip comes in, when they typically repay it in full.
More than two million people are now believed to have applied as wage freezes and unemployment start to take their toll on festive budgets.
Insolvency firm R3 states that 45 per cent of people are now struggling to make their salary last from month to month, with more people than ever expected to buy gifts using payday loans in the final run-up to Christmas.
Ian Porter from Ferratum, Europe's biggest online microloan lender, said most of its customers are aged between 18 and 35 and work full-time, but find that money is tight from time to time.
"Christmas is traditionally a time when people's cash flow is under the most strain. We find that people like the flexibility of a microloan. They are able to borrow anything from £50 and £300 and repay it within a maximum of 45 days," he explained.
It is thought that the trend of borrowing money using payday loans is likely to continue into the new year, when Britons start to get their credit card bills through for their Christmas spending and find they are struggling to pay them off.
According to Consumer Focus, the average payday loan is for £300 and goes to a household earning less than £25,000.
Compare a wide range of UK payday loans
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