Consumer Focus: Britons turn to payday loans for debt relief

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Consumer Focus: Britons turn to payday loans for debt relief

More Britons are turning to payday loans to provide debt relief, Consumer Focus has revealed.

A new report by the organisation stated that the number of people taking up this option has increased four-fold since 2006.

As a result, it believes the number of consumers signing up for a payday loan may potentially rise by almost half within the next few years.

Marie Burton, financial services specialist at Consumer Focus, attributed this partly to the effects of the credit crunch.

However, she warned that payday loans could have major consequences in the future.

"Such expensive [interest] rates can leave consumers who defer payments or take out repeat loans caught in a debt trap," she commented.

Ms Burton added that sensible safeguards need to be put in place to ensure that borrowers do not become dependent on high-cost credit.

This comes after Sharon Flaherty of confused.com said consumers need to be given more information about what will happen if they default on a payday loan.

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