British turning to overpriced “payday loans,” says expert

British consumers are increasingly turning to “payday loan” providers, which offer loans at annual percentage rates (APRs) of up to 1,355.

The loans, which are popular in the US, pay customers up to £750 into their bank account with an agreement to repay the loan at the end of the month when their paycheque arrives, according to a financial expert at fool.co.uk.

However, they typically charge £25 for every £100 borrowed, rising to £31.25 if the customer fails to pay it back on payday and can reach £1,400 if a borrower does not make any payments for a year, claims the website.

“These truly ugly loans are overpriced, overused and over here. Brits are falling victim to this form of borrowing when they should be fleeing from it,” Laura Starkey, a financial expert at price comparison site fool.co.uk, told the Independent.

To survive the credit crunch icWales.co.uk advises people to cut down on car journeys to save petrol, switch their utilities supplier and change credit cards to get the most competitive rates.

Tags: To survive, Credit card, utilities supplier, price, credit, comparison, Payday, Credit Cards