A poll independent loans comparison site Readies.co.uk today revealed public sector workers are turning to payday loans to make ends meet, given the sharp rise in prices, increasing the pressure on those “just-about-managing”.
In real terms, average pay was higher in January 2006 than it is now – according to ONS data released last week. Readies.co.uk, a licensed credit broker which compares business, personal and car loans, polled 8,000 anonymous visitors to its website last month who were seeking short-term borrowing.
Of those in employment seeking a payday loan, the highest number (27%), over 1 in 4, work within areas of the public sector such as nurses, teaching assistants and council staff. Public sector personnel will receive an average 1% increase in basic pay this year for 2017-18 after ministers accepted the recommendations of pay review bodies before the General Election.
Of all those seeking a pay day loan, 24% stated the money would be used towards unexpected bills as they had insufficient savings whilst 18% sought additional funds to pay off an existing payday loan. 15% need money to help with mortgage and rent commitments and 10% need extra money to help with utility bills. The balance of requests were for holidays and leisure activities.
Households are under increasing strain as inflation hit 2.9% last month, its highest rate in 4 years, due primarily to the weak pound. Staggeringly, 43% of all people polled, had already taken 5 or more payday loans out in the past year alone with only 6% indicating that there was “no chance” or they were “not likely” to seek further short-term borrowing in the future.
Stephanie Cole, Operations Manager at Readies said: “Payday loans have a negative stigma attached to them, but the reality is that they are now part and parcel of some people’s’ lives as the pay squeeze intensifies as wage growth falls further behind inflation.
“The pay squeeze, particularly on public sector workers, will only serve to increase the number of people turning to payday loans who are already struggling with rising fuel, food and transport costs.
“Anyone considering a payday loan – or any loan for that matter – should always seek to get the right information to make an informed borrowing decision.”