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You can find the current article at its original source at http://www.guardian.co.uk/money/2013/feb/27/payday-loans-calls-debtline
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| Payday loans cause huge rise in calls to National Debtline | Payday loans cause huge rise in calls to National Debtline |
| (4 months later) | |
| The number of people contacting National Debtline with problems involving payday loans almost doubled in 2012, with some consumers reporting they had taken out the short-term, high-cost loans despite being bankrupt or having missed past payments. | The number of people contacting National Debtline with problems involving payday loans almost doubled in 2012, with some consumers reporting they had taken out the short-term, high-cost loans despite being bankrupt or having missed past payments. |
| The free advice service said it took 20,013 calls related to payday loans over the year, a 94% increase, and up 4,200% since the financial crisis began in 2007. Many callers reported that they had more than 10 payday loans, while some said that they had taken as many as 80 over a short period. | The free advice service said it took 20,013 calls related to payday loans over the year, a 94% increase, and up 4,200% since the financial crisis began in 2007. Many callers reported that they had more than 10 payday loans, while some said that they had taken as many as 80 over a short period. |
| While just 465 people approached National Debtline with payday loan problems in 2007, in 2012 it dealt with almost 100 calls on the subject every day of the working week. | While just 465 people approached National Debtline with payday loan problems in 2007, in 2012 it dealt with almost 100 calls on the subject every day of the working week. |
| The figures reflect the rapid rise in the availability of the loans, as well as the squeeze on household budgets and the high cost of borrowing in this way – some loans have APRs of many thousand percent. | The figures reflect the rapid rise in the availability of the loans, as well as the squeeze on household budgets and the high cost of borrowing in this way – some loans have APRs of many thousand percent. |
| Although lenders say quoting an interest rate in annual terms is not a fair reflection of the cost, customers who roll over debts or take new ones to cover existing loans can quickly see their debts grow. | Although lenders say quoting an interest rate in annual terms is not a fair reflection of the cost, customers who roll over debts or take new ones to cover existing loans can quickly see their debts grow. |
| There are signs the problem will continue: in January National Debtline took a call for help on payday loans for every seven minutes its phone lines were open. | There are signs the problem will continue: in January National Debtline took a call for help on payday loans for every seven minutes its phone lines were open. |
| "Payday loans were initially designed to suit a small number of people in very specific situations, and this is something they can still do effectively. However we hear from thousands of people each year who have been lent money when it was clearly not the right option for them," said Joanna Elson, chief executive of the Money Advice Trust, which runs National Debtline. | "Payday loans were initially designed to suit a small number of people in very specific situations, and this is something they can still do effectively. However we hear from thousands of people each year who have been lent money when it was clearly not the right option for them," said Joanna Elson, chief executive of the Money Advice Trust, which runs National Debtline. |
| "Borrowing on this scale can have serious ramifications if not dealt with properly, and advice services like National Debtline risk becoming over burdened by the proliferation of payday loans." | "Borrowing on this scale can have serious ramifications if not dealt with properly, and advice services like National Debtline risk becoming over burdened by the proliferation of payday loans." |
| Elson said she was not confident it was a "sensible practice" for lenders to offer to deposit money in a borrower's account within 20 minutes of them making an application, and the decision to lend "shouldn't be taken lightly". | Elson said she was not confident it was a "sensible practice" for lenders to offer to deposit money in a borrower's account within 20 minutes of them making an application, and the decision to lend "shouldn't be taken lightly". |
| The charity said it had heard of "countless examples" where guidelines on responsible lending appeared to have been breached, and where, when payments were missed, lenders had appeared reluctant to negotiate sustainable repayment plans. | The charity said it had heard of "countless examples" where guidelines on responsible lending appeared to have been breached, and where, when payments were missed, lenders had appeared reluctant to negotiate sustainable repayment plans. |
| Elson called on the Office of Fair Trading (OFT) to make use of new powers to suspend consumer credit licences with immediate effect where it identifies persistent bad practice. | Elson called on the Office of Fair Trading (OFT) to make use of new powers to suspend consumer credit licences with immediate effect where it identifies persistent bad practice. |
| "The rapid emergence of payday lending has caught regulators a little off guard. We have waited some time for real action to be taken to help prevent people falling into a serious debt spiral with these loans," she said. | "The rapid emergence of payday lending has caught regulators a little off guard. We have waited some time for real action to be taken to help prevent people falling into a serious debt spiral with these loans," she said. |
| "We encourage the OFT to protect consumers by suspending the licences of those lenders shown to persistently break the OFT's own guidance on debt collection." | "We encourage the OFT to protect consumers by suspending the licences of those lenders shown to persistently break the OFT's own guidance on debt collection." |
| The OFT is about to publish the results of a year-long review of the sector. | The OFT is about to publish the results of a year-long review of the sector. |
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