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Payday loans plunging families into debt

By Sarah Engle, Thu 9 Feb 2012 - Published in Loans

High interest payday loans are on the rise as families struggle to keep up with the amount of debts they have amassed.

Whilst credit card usage is declining, new research by PricewaterhouseCoopers (PwC) found that many UK households still has an average debt of £7,900. The company believes that credit cards are entering a "mid-life crisis" as more people are choosing payday loans as a faster alternative to access necessary funds.

Recent research by Aviva found that 62 per cent of homeowners were worrying about the increased cost of living, with 42 per cent of families unable to save anything over the past 12 months.

Bosses at the PwC believe that people need to get more money quicker and that credit cards are no longer a viable option.

Simon Westcott, director of company's financial services practice, said: "Although the UK government's austerity drive appears to be hitting home, with households paying off an average of £355 worth of their debt in 2011, three years of austerity by UK consumers has only made a small dent in the total levels of borrowing."