Payday loans at Christmas 'could be a bad idea'

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Payday loans at Christmas 'could be a bad idea'

Individuals considering taking out a payday loan in December in order to fund their Christmas spending have been advised against the idea due to the high rates of interest this type of lending is subject to.

A spokeswoman for The Money Advice Service said that while it might be tempting to have a bit of extra cash for the festive season, the fact average rates on this type of borrowing tend to be in the thousands of per cent means a small loan can quickly snowball into something much larger.

"Before using this type of borrowing we would urge people to always check what other options are available, for example, can you get an overdraft with your lender, to cover you until payday?" she commented.

According to a recent report by R3, nearly half the population (45 per cent) struggle to make their income last until payday each month, with up to three and a half million adults are considering taking out a payday loan over the next six months as a result.

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