Payday loans

I just typed in payday loans into my search engine and got 915000 results. Admittedly some of them are going to be several results for the same website and a there is going to be a huge amount of irrelivant results. It does show one thing though there is a thriving trade in payday loans even though we are in the middle of recession.

What is a payday loan? It is where a company lends you a fixed amount of money for a short period of time, normally upto 30 days. You then pay the amount back plus charges which can be around £25 per £100 borrowed. The money is taken via your debit card or your cheque being cashed.

The first thing I found was how incredibly easy it was to apply for one and was approved in a matter of seconds. After signing my agreement online the money was in my account in a couple of days. I got a reminder before my payday telling me I could defer the loan or would be allowed an increased limit for my next loan. I would also get a call on my mobile and landline followed by a text. Once I paid the money off I would get more e mails inviting me to borrow more. If a person deffered a £100 loan every month for 12 months they would pay £300 in interest alone.

They are great for people who need a short term one off loan to pay a bill and have a regular income. For those on low incomes or in financial difficulties it can be a trap that is very difficult to get out of. £50 can soon escalate to £500 including interest, it did for me. There have been numerous reports of people in similar situations or worse. In my case I got to a point where I was in a position to pay the debt off. I can't calculate how much interest I paid but it was in the hundreds.