The issue of Pay Day Loan companies and the impact they have on the poorest in society is huge but possibly not immediately obvious to all. There is a lot that needs to be done and I would like to see the Government take a number of steps, including capping the levels of interest rates that can be charged for lending. A representative APR of 5853% is simply not acceptable.
Another important change is to stop Pay Day Loans being advertised before the watershed so that children’s financial awareness and education is not influenced by these companies. The Children’s Society believes that children should receive their financial education from their family and school and not from glossy advertising. I absolutely agree! Not everyone has the benefit of being financially aware and more needs to be done to support them.
The Children’s Society conducted a survey that revealed that 3/4 teenagers had seen a pay day loan advert in the last week. Children are already using words like ‘fun’, ‘tempting’ and ‘exciting’ to describe these adverts. These children are the borrowers of tomorrow.
Why is this such an issue?
One simple mistake can plunge a family into spiralling debt. A loan taken out as a quick fix can soon spiral out of control if they find they are unable to pay it back within the terms agreed. Even if they can pay it back, the cost to that family is still significant.
This show’s that a £400 loan taken out for a period of 30 days will cost a family £127.15 which in its self is extortionate. If they don’t meet these agreed terms the cost will rise significantly. This is also at least £127.15 taken out of the household income that can now not be spent on:
- Rent/Mortgage
- Food
- Utility Bills including Heating
- School Meals
- School Uniform and Equipment
- School Outings
For a low income family, £127.15 will make up a large percentage of their monthly disposable income. In some cases it could be all of it.
Not only is this money taken out of the families pocket, it is now taken out of the local community and feeding the huge profits of the companies selling these loans. This has a wider impact on local business, housing providers and the local community.
Please Act Now And Support The Campaign!
The Children’s Society are running a campaign to help end the effects poverty has on children. The Debt Trap is a real issue in this country and more pressure is needed on Government to address the impact.
There is an important opportunity on the 13th October to Ask A Peer to vote to end Pay Day Loan advertisements before the watershed. Please act now and help spread the message on social media and urge the Government to take action.