British consumers turn to payday loans at an alarming rate. / Image: Images_of_Money/Flickr/CC BY - www.howmuchcaniborrow.org.uk

The number of payday loans has increased significantly in Great Britain over the last month. The increase continues to sharply escalate following the Bank Holiday at the beginning of the month. The demand has risen by about 58 percent from what it was in this same period last month.

Prices continue to rise

Many financial experts believe this increase in payday loans in Great Britain is a significant indicator of the direction of the country’s troubled economy. According to Moneysupermarket.com, which is a product comparison site, the weekly expenditures for a working class family in Great Britain have risen by an alarming 54 pounds (close to $87) a week over the last six-month period.

Wages stay stagnant

Working people are struggling harder than ever to stay on top of their finances as prices continue to grow and wages continue to stagnate. A report recently put out by Scottish Widows claims that about 8.5 million households would be in deep trouble financially should their primary source of income end. Only about 25 percent of people surveyed reported that they would be financially stable in the long term if their income was lost.

The Consumer Protection Report from Scottish Widows also reported that nearly half of the country’s families with children are reliant upon two salaries.

Payday loans an economic barometer

Tim Moss, who is the head of loans and debt for the Moneysupermarket.com site, says: “These products act as a barometer, giving a unique insight into the state of the nation’s finances.” Moss continues, “It’s no surprise to see the demand for payday loans rise so sharply in the current climate.”

Payday loans often cheaper than overdrafts

Moss adds, however, that despite their critics, these types of loans are often a better value than the penalties faced when entering an authorized overdraft.

Decisions should be weighed carefully

Consumers should always weigh the decision carefully before taking out a payday loan. Payday loans can be expensive if they aren’t paid back on time, and payday loan terms generally only last a few weeks.

Sources

My Finances

Payday Bank

Yorkshire Post