There are crazy stats out there from the Money Advice Service saying that one in three adults from the UK planned to pay for the Christmas holiday using credit cards, and 1.2 million admitted they planned to turn to payday loans to cover the cost of Christmas.
So easily can this “one off” turn into a spiral that can lose control as interest and charges get added.
I have been in a whirlwind of trapped debt caught in a vicious circle of high fees and high interest. So easy to fall into, you can do it privately, from your sofa, from your app. No one will know and it’s a quick and easy secret that is never quick to resolve.
Although none of the companies out there are working to what most would consider a moral way, some are working in worse ways than others, especially when it comes to high charges.
These high charges are the biggest culprit that gets borrowers spiralling out of control with debt. Which? has carried out research and found that more than half of payday loan users (56%) had been charged for missed or bounced credit repayments over 12 months, compared to 16% for all credit users. They also found that one in five payday loan users (20%) said they had been hit with ‘unexpected charges’.
And now, from the comfort of your sofa, or your office, or your bed, or wherever in the world you are reading this, there are things you can do to try to control this.
Which? has launched Clean Up Credit campaign to crack down on unfair and disproportionately high fees. It sets out five ways the Financial Conduct Authority (FCA) should act to clean up the whole of the credit market and send a clear message to irresponsible lenders:
- Ban excessive default fees and charges – default charges should reflect lenders’ actual costs, and be capped.
- Crack down on irresponsible lending – make strong rules on affordability checks taking into account borrower’s income, expenditure and ability to repay the debt, including any outstanding credit commitments.
- Put people in control of their credit – end unsolicited increases in credit limits, unauthorised overdrafts should be opt-in only and limit to the number of times high-cost loans can be rolled over.
- Clear and transparent information – the cost of credit and all fees and charges should be transparent, and for high-cost credit should be displayed clearly as pounds per £100 borrowed over 30 days.
- Swift and early intervention for people in financial difficulty – the FCA should force lenders to freeze charges for borrowers in difficulty, and prevent them from charging interest on high-cost loans beyond 30 days after borrowers default.
Go on do it now. It will take less than a few minutes.
But, you don’t have to just sign up to the petition.
There are plenty of dodgy sharks out there who are not regulated at all. These regulations will not make any difference to them as they are already playing outside of the rules. Playing on the innocent and as easy targets.
You may remember some time ago that I got on my high horse about a “lender” who crossed me.
They targeted me. Someone who very obviously should not have credit. Someone who is not suitable for their products. They preyed on me, thinking me an easy target. But I turned the table and I turned into the shark.
I reported them to the Office of Fair Trading who have confirmed to me that they’ll look into the complaint to take action as they do not have a consumer credit license.
See, one person. One action. It does make a difference.
It’s your turn. You make a difference. Sign the petition. Report illegal lenders. Make this stop. #BeTheShark and #CleanUpCredit.
Ricky Willis is the original Skint Dad. A money-making enthusiast, father, and husband to Naomi. He is always looking for unique ways to earn a little extra.