The number of Northern Ireland people struggling with payday loan repayments has soared in a year, it can be revealed today.
New statistics provided for the Belfast Telegraph by the Citizens Advice Bureau (CAB) shows a hike of 410 individuals seeking help with this specific problem within the last 12 months.
In 2011, the charity aided some 3,000 people with a debt problem, of whom 60 were concerned about payday loans, but last year that figure rose to 470 out of a total 4,700.
The shocking news comes after payday lenders were given 12 weeks to change their business practices after regulators uncovered widespread evidence of irresponsible lending and breaches of the law, causing "misery and hardship for many borrowers".
Following a year-long review of the £2bn sector, the Office of Fair Trading said too many people were being granted loans they could not afford to repay, and lenders' revenues were reliant on customers failing to repay their original loan in full and on time.
Money Advice Programme manager Rachael Cray said CAB's latest figures may not even reflect the full extent of the problem as they do not include those people searching for help online.
"All the money advisers in our network reported a significant increase in the amount of clients seeking help for a payday loan debt. We are worried this will only continue to increase as more people are affected by stretched household budgets and the increased cost of living," she said.
"A third of people here believe they are only one month away from financial difficulty should they face an unexpected expense, or drop in income."
Interest rates of over 4,000% are charged by some payday lenders and if loans are rolled over the amount owed can soar.
The average payday loan debt in Northern Ireland is £574. However, CAB has seen the amount owed hit £5,000 for just one loan – illustrating how the situation can easily spiral out of control.
Ms Cray welcomed the Government's plans which include restricting the number of ads firms can put out per hour, the times they can advertise and forcing them to display interest rates more clearly.
How do payday loans work? Usually someone can borrow a few hundred pounds for a short time. The cash is often emergency borrowing to pay an urgent, unexpected bill. What is the problem? The loans are very expensive with very high rates of interest. Some charge interest rates of more than 4,000% and if this is rolled over, debts can quickly escalate.
Man duped by lending scam loses £640
By Claire McNeilly
People are being advised against paying money upfront as an advance on payday loans or cash prizes.
The warning comes from police after a man who lives in Lisburn was duped into paying £640 to secure a £3,000 loan.
A PSNI spokeswoman said the victim had applied for a payday loan online and was subsequently contacted by telephone. He was told by the caller that an initial payment was required because there was no guarantor for the loan.
The Co Antrim man then transferred £640 in UKash vouchers as requested, but no loan funds were released.
Police have established that this male was an unfortunate victim of a scam and the £640 in vouchers have been cashed in a number of countries.
Officers investigating this incident have said they do not want to see any more local people taken advantage of.
"We understand times are hard for a lot of people however anyone considering one of these loans should be to be careful," said a police spokeswoman.
"It is reasonable to be wary, especially if you are being asked for money in advance. If a call or email offering a prize or a loan in return for a small 'fee' is unsolicited, you are right to question why you are being contacted."