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Research published: July 2012

YouGov carried out a poll on behalf of Turn2us and the Consumer Credit Counselling Service (CCCS) (now StepChange Debt Charity) looking at payday loans. The results revealed that people are turning to payday loans to bridge a financial gap in their household income before checking out other easier and less-costly ways to maximise their income.

Key findings

  • 30% said they were left worse off after taking out the loan
  • People who are unemployed are nearly twice as likely (than those in work) to have taken out a payday loan
  • Over half of those (51%) who have turned to payday lenders regret their decision to take out their first loan
  • Two-thirds (68%) of people who have taken out a payday loan in the last 12 months have taken out two or more and over one in six (17%) of people have taken out a staggering seven or more loans
  • Over two-fifths (43%) of respondents who work full time said they took out their first payday loan because they needed the extra cash before pay day
  • Nearly a quarter (24%) reporting that they needed the money to pay for necessities, such as food for their families
  • Over a quarter (27%) of people who took out a payday loan didn’t look into any other financial solution ahead of taking out the fast loan

Way forward

By carrying out this survey, we hope to highlight the issues around payday borrowing and recommend that people who are thinking of taking out a payday loan should first check their entitlement to benefits/tax credits and eligibility for charitable grants. They can use the Turn2us Benefits Calculator and Turn2us Grants Search to do this.

Turn2us Director’s comment

Alison Taylor, Director of Turn2us, said: “Of the 13 million people living below the poverty line in the UK, only 7.6 million are claiming state support. So with £19 billion in state benefits going unclaimed each year, we would urge anyone thinking about borrowing a payday loan to find out if they are entitled to any financial support first and avoid unnecessary debt.”

StepChange Debt Charity (formerly CCCS) Director of External Affairs’ view

Delroy Corinaldi, StepChange Debt Charity (formerly CCCS) Director of External Affairs, said: “Payday loans can be an extremely expensive way to borrow, and this kind of debt can quickly spiral out of control.  This research shows just how many people are turning to expensive payday loans even though they may be entitled to welfare benefits that they are not aware of.  The key message for anyone struggling to cope is to consider all of your options, and seek free advice from a charity such as Turn2us or CCCS (now StepChange Debt Charity).”

Debt advice

StepChange Debt Charity (formerly CCCS) provides free, impartial and independent debt advice via its freephone helpline on 0800 138 1111 and via its online debt counselling tool at the StepChange Debt Charity website.

See also the Turn2us Debt information sheet

Further information

For more information, please contact: Emma Lamberton at email: emma.lamberton@turn2us.org.uk

Last updated: 4 February 2015

References

Last updated: 1 May 2013