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(London.CityRegions.com, May 19, 2013 ) London, UK -- In the UK, the number of people taking out payday loans doubled this year than last year. Now, a leeds debt charity says that incomes of consumers are do not add up to the amount of payday loans they have taken out.
According to the StepChange Debt Charity, From 2011 to 2012, there was a 109 percent increase in the number of its clients with payday loans with the average amount owed increasing by £390.
In one particular case, a borrower had so many payday loans that his debt exceeded £9,000. That was just the amount of loans obtained, not the interest and penalties charged to the account. When payments of £50 were not enough, the Leeds company withdrew £6,000 to pay for the debt from their credit card without permission.
Biting off (or Borrowing) More than Can be Swallowed
While the debt charity realized it was helping twice as many people out debt, they saw clear evidence that people were getting loans that they couldn't’ afford to payback. This either means they either just refused to pay them back, lost their job in the meantime of paying the loans, or simply lied on the applications to obtain a loan.
StepChange has recently added a section of their website directly related to payday loans. The company stresses that while payday loans can help with short term money problems, they can not completely repair the effects of being broke. Once a consumer is constantly paying off and getting more payday loans, it becomes a Russian Roulette almost as dangerous as having real credit cards. While some payday loan companies don’t check credit scores, they will report to credit bureaus with unpaid loans.
Stopping the Out-of-Control Interest Rates
Currently, StepChange says it has clients with interest rates up to 4,000%. A new People’s Bank is being established to help those with these ridiculous rates can pay of their debt, but still borrow money when absolutely needed.
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Source: EmailWire.Com
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