Ipswich: Payday loans used to buy essentials can result in spiralling debt
PUBLISHED: 15:56 01 February 2013 | UPDATED: 15:56 01 February 2013
BOSSES at Ipswich and District Citizens Advice Bureau (CAB) say they have seen a ten-fold increase in the number of clients receiving help with debt having taken out payday loans.
Marketed as short-term bridging loans, they have attracted criticism because of their very high interest rates.
Nelleke van Helfteren, deputy manager at Ipswich and District CAB, said: “At a time when wages and benefits are not going up we are seeing our clients taking desperate measures to ensure they have enough cash to eat and heat their homes.
“These payday loans are being used to buy food and most clients are unable to find the funds to repay the loans at the end of the term which leads to spiralling debt.
“We have also seen an increase in clients who are coming to us, not knowing where to go for help as they are having to juggle between making sure they have paid their rent, food, utilities and transport costs.”
Ms van Helfteren predicts the situation will worsen for many when changes to the welfare system take effect.
“What really concerns us here at Ipswich and District CAB is that the upcoming changes to benefits and in work tax credits have not started to bite yet and things will only get more difficult for our already vulnerable clients and families.”