BANK ACCOUNTS, CREDIT CARDS

Half of Brits struggle to make it to payday

Almost half the population are likely to struggle to cope financially until their next payday, leading experts to warn of the danger of payday loans.

Research by insolvency trade body R3 has found that 45% of Brits struggle to make it to payday each month, leading many to turn to payday loans.

The research has revealed that 3.5 million adults are considering taking out a payday loan in the next six months.

But researchers at R3 have warned of the dangers of taking out a payday loan, as interest on these loans can be extremely high.

"Payday loans are not the best way to resolve debt struggles.  We know that many who take them out find them to be a negative experience, often escalating financial troubles,” said Frances Coulson, President of R3.

The research found that 60% of people who have taken out a payday loan regret the decision, with 48% believing it made their financial situation worse.

Only 13% of those who had taken out a payday loan believed it had had a positive impact on their financial situation.

It was also found that a new group of ‘zombie’ debtors has emerged – people who can only pay the interest back on the debt, rather than the debt itself.

According to the research, one in six people are only able to pay the interest on their debt, leading to a strain on their bank accounts and more financial worry.

"We hear talk of ‘zombie' businesses, but seeing individuals run their finances in the same way is troubling,” added Mr Coulson.

“‘Hanging on' each month simply cannot be maintained forever. This group will have very few options should interest rates rise or their circumstances change.”

If you are struggling to make ends meet each month, there are a range of savings accounts and ISAs available, including the Post Office Instant Saver account.

Tags: BANK ACCOUNTS, cost of living, CREDIT CARDS, debts, over 55s, Payday loans