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Payday loans charge over the top interest

20/02/09

Payday loans are often taken out by those people who have the least money however they do have a reputation of charging huge rates of interest and as much as 2,000% in some cases.

Research carried out by the Abbey suggests that over fifty per-cent of UK residents will have to cut down on their spending dramatically days before they are due to get paid as they have run out of money.

Many people resort to taking out a payday loan as quick fix solution to their money problems and at the time it may seem like a good option as they do not carry out credit checks. However many are unaware that there are huge rates of interest on these loans.

The Conservative shadow housing minister commented, “As the Bank of England slashes interest rates close to zero, we think it is obscene that anyone should end up paying 10,000 per cent APR, particularly when the evidence suggests that these loans are targeted at some of the most vulnerable members of our society.”