A campaign has been launched for Payday Loan Danger Day with a warning that there are "some sharks you can’t see coming".
The campaign, which is being supported and commended by Church Action on poverty and other advocacy groups, is being led by Coast & Country, a social housing provider in Tees Valley in the North East of England.
Payday Loan Danger Day is the date when people struggling to make ends meet are tempted to take out a pay day loan. It falls on 24th January and is caused by the long gap between December and January wage packets.
According to ICM research commissioned for the campaign, more than half a million people in the North East were paid on December 24; ahead of the Christmas holidays but nearly six weeks before the next payday on January 31st.
Coast & Country, one of the largest regeneration and housing companies in the North East, has launched the campaign to counter the large scale advertising of payday loan companies and highlight other forms of affordable alternatives, including credit unions.
Teams of experts from the company are on the streets talking to local people, while advertising vans are touring the area to ensure the message hits home.
One victim of the sharks, aged 44, spoke of the stress and anguish he experienced after taking out a high interest loan.
He borrowed £500 to fund the family’s Christmas and soon found himself sinking further into debt with the money he owed spiralling to £1,500.
As a self-employed lorry driver, he was unable to tax his vehicle. As a result he was unable to work and even ended up having to sell his lorry to pay off the debt.
He said: “It made me ill. The situation went on for about a year including being barraged with phone calls chasing up the outstanding debt.”
“My advice to people is stay away from these types of loan. It does not matter if it is a matter of life and death or how desperate you are for money – do not do it. It nearly ruined me and I would not want anyone to go through what I went through,” he added.
Iain Sim, Chief Executive of Coast & Country, said: “Households already are struggling to make ends meet as the price of everyday basics such as food, gas and electricity soar. This month there is even more financial danger as payday loan ‘sharks’ are circling. People need to make their money last longer due to getting paid earlier than usual because of the festive break."
“Payday loan danger day is January 24th and on that day we aim to make our area a ‘Wonga free zone’, declared Mr Sim. “People should beware of locking themselves into high interest rates, some money lending websites charge more than 4,000 percent."
He continued: “It is so easy for people to find themselves on a payday loan treadmill as they resort to taking out another loan to in a vain attempt to balance their budgets.
“By saying no to payday loans, people can avoid getting into financial deep water. Our teams are ready and available to offer free, independent advice to help prevent people from drowning in debt,” said Mr Sim.
* Coast & Country: http://www.cch-online.org.uk/
* Church Action on Poverty: http://www.church-poverty.org.uk/