Payday loans providers 'target youngsters on Facebook'

27/01/2009

More and more people are turning to high-interest payday loans as the economy slows, according to a debt charity.

The Consumer Credit Counselling Service (CCCS) said today that the short-term unsecured loans - which can carry annual interest rates of over 1,000 per cent - have become a "growing phenomenon", particularly among young people.

Difficulties with securing credit on the high street due to the current economic gloom was blamed by the organisation for the loans' popularity.

Providers have also been found to be targeting youngsters on popular websites such as Facebook.

Frances Walker, CCCS spokesperson, said: "Payday lenders are a growing phenomenon in the context of the credit crunch because as people, particularly the less well off and very young for example, find it very hard to find credit.

"They are turning to these other sources of credit where the interest rates and the APRs are very high… [providers] seem to have a forte of targeting young people because they have taken out quite a lot of advertising on things like Facebook."

Recent figures from financial website uSwitch suggested that a consumer who borrowed £750 in a payday loan could be forced to pay back £1,688 if they deferred their repayments for five months.

Tags; Debt Management and Banking, Credit Card Lifestyle,

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