News The Dangers of Payday Loans

Money Saving Expert, Martin Lewis, speaks about the dangers of payday loans on ITV's Daybreak.

When you're short of cash and you see an advertisement about payday loans on TV, it can be tempting. However, many people who get a payday loan, can't afford to repay it the next month and end up taking out more and more, unable to break the cycle.

Whilst payday loans may appear as an affordable way to get quick cash, the costs can escalate, making many financial situations worse. Advertised rates can be around 4000% APR and customers can be charged anything up to £150 in fees and charges for borrowing for up to 30 days.

Martin warns, "While the costs aren't quite as bad as the rates would seem, the real problem comes because they sometimes encourage you to keep rolling over the debt so you're in it for a long time – and then the hideous interest rates are realistic."

Martin sited Credit Unions as an alterative, before taking out a payday loan. Cardiff Credit Union offers affordable rates and you are encouraged to save for those financial emergencies whilst repaying your loan. Just saving a small amount can really help in difficult times.

Martin says "If at all possible, don't get a payday loan out." The message is clear; If you are considering a payday loan, have a look at what Cardiff & Vale Credit Union have to offer first.

See the full story at: http://www.itv.com/daybreak/money/martinlewissection/payday-loans/

Posted: Friday, 17 June 2011