THEY are supposed to be a quick fix for a temporary lack of cash – but record numbers of people in Sheffield now rely on payday loans.
CAB debt advisers in Sheffield are alarmed at spiralling demand for the easy money – which can come with huge interest rates.
The boom in payday loans is adding to people’s long- term financial difficulties, they say.
The BIS select committee recently heard of cases where people had more than 20.
The industry has exploded in recent years at a time when many cash-strapped families are struggling to make ends meet, in 2006 there were just 300,000 borrowers, by 2010 there were 1.9 million.
The select committee is calling for percentage rates to be replaced by an actual charge in pounds and pence.
Steve Wilcox, of CAB, said many payday loan companies favoured taking fees via regular card payments because they were difficult to cancel.
In fact many people – including some banks – believed card ‘payment authorities’ were impossible to end without the company’s agreement, he added.
He said: “Loan firms will say you don’t have a right to stop it. People have a right to withdraw their authority and if a payment is taken the bank should provide an immediate refund.”