Christmas Season Sees Spike in Pay Day Lending

December 5, 2014

Luke-Notley small (Custom)According to research from the Money Advice Service, roughly 1.4 million Britons will seek pay day loans this Christmas period to help pay for gifts and other festive items. Despite recent warnings about pay day lending and caps placed on pay day loans, more than a million of us will still seek to borrow cash with high interest rates.

The pressure of creating extravagant Christmas celebrations for families and loved ones is forecasted to cost the UK public a staggering £26 billion this year – £2 billion more than Christmas 2013. A significant portion of this money is borrowed, increasing the nation’s debt.

Jane Symonds, from the Money Advice Service, explained: “Christmas is such a special time of the year for most of us, but a big debt hangover is the last thing anyone wants. Planning ahead by looking carefully at costs will help consumers to take control of their spending and alleviate some of the pressure. This can also limit the need to turn to options such as payday loans, which will be less accessible in the New Year due to the recent announcement by the FCA.”

Pay day loans also enjoyed a rise in popularity last Christmas, with the last six months of 2013 witnessing a 42% increase in pay day cases dealt with by debt charity Stepchange. As well as the pay day loans, almost half of Britons will turn to credit cards, store cards and overdrafts to help pay for their Christmas festivities.

Inflation above the average wage growth and intense Christmas advertisement campaigns have made it difficult for many Britons to afford their aspirational Christmas.

The research was carried out over 3,000 UK adults, finding that 2.87% of the surveyed adults planned to use pay day loan services. The Money Advice Service went on to offer 10 tips for having a cost effective Christmas, helping Britons avoid the temptation to plunge themselves into debt over the festive period.

If you are struggling to repay a pay day loan or suffering from any other form of debt, the InControl team can help you organise and manage your debts effectively. Visit the InControl homepage or contact our dedicated customer services team on 0800 072 6623.