Unemployment and reduced working hours forcing more into payday loan debt trap
Payday loans are trapping increasing numbers of people here in a spiral of debt, according to a report.
Statistics from the StepChange debt charity reveal a sevenfold increase in people with payday loans contacting them for help.
In the first six months of the year, 23% of the people the charity works with had payday loan debt, compared to 4% in the same period in 2010.
The group owed an average of £1,689, exceeding their average monthly income of £1,440.
StepChange also said people here owed, on average, 20% more than people in the rest of the UK.
The average amount of unsecured debt per person was £18,360. Mortgage arrears accounted for £3,249 of that – an increase of £974 from last year.
Unemployment and reduced working hours were the main reasons people got into debt, with those aged between 40 and 59 the worst affected.
StepChange chief executive Mike O'Connor said the figures were a stark reminder of the tough financial landscape.
"Far from feeling the benefits of recovery, many people here struggle to meet even the basic cost of living," he added.
"They are increasingly turning to payday loans and other high-cost credit in an attempt to bridge the gap.
"What looks like a lifeline can become a debt trap for people and their families, and high-cost credit is an increasing problem here.
"Access to mainstream credit has tightened during the recession, and overstretched consumers have turned to things like payday loans to plug the gap.
"Excessive interest and charges can build up quickly, often leading consumers to take on more and more credit.
"With debt levels reaching a worrying height in the province – our Northern Irish clients now owe an average of 13 times their monthly income – it is crucial that people seek free advice and guidance on how to tackle their debts.
"The Financial Conduct Authority's intention to cap the total cost of credit at 100% of the amount borrowed, and to limit the amount of times a loan can be rolled over, is a step forward, but we need to see further action from the regulator to fix deep-rooted problems."
Anyone struggling with debt can seek free advice from the StepChange Debt Charity helpline on 0800 138 1111 or at www.stepchange.org.