/ Money

Quit it with the barrage of payday loan ads

Wad of £50 notes

As payday lenders bombard vulnerable consumers with direct advertising, it isn’t any wonder that some fall into a spiral of debt, especially at this time of year when money is getting tight.

Last summer, I took out a payday loan as part of a Which? Money investigation. We found widespread poor practice in the market, including inappropriate loan rollovers and unsolicited increases in the future loan amounts offered.

What I didn’t expect, though, was the aggressive level of targeted advertising which followed, tempting me to take on further debt.

Non-stop ads

Since borrowing £100 in August, I’ve received an email every few days offering a variety of promotional deals. In over 60 direct emails, one company alone has welcomed me back to ‘your trusted online lender’ with repeated offers of weekend funding, payments sent within an hour and loans of up to £1,500.

Several of the emails offered 10% or 15% off the monthly finance charge. Sounds like a bargain – until you consider the starting APR of 1,734%.

The company also sent letters to my home address (20% discount this time), as well as text messages to my mobile phone warning me that this was my ‘last chance to come back and save big’. This type of relentless pressure selling is dangerous and could encourage many consumers to apply for loans they neither need nor can afford.

No respite on high days and holidays

My birthday marked a new low point. Not only was I offered a 25% discount on new loans of up to £1,500, I was told ‘now you can get the money you need to enjoy your birthday worry-free’.

Not content with exploiting a day of the year that has nothing to do with high-cost borrowing, the same email offered me £20 for every friend I refer. A happy birthday for the lender perhaps, but not for my friends in the longer term.

And it’s exactly at this time of year, when people have overspent and money’s getting tight, that these companies will be ready to pounce.

While payday loans are undoubtedly expensive, there are other equally important problems in the market – targeting vulnerable individuals with repeated offers of near-instant credit for one. It’s no wonder that taking out one payday loan so often leads to a cycle of worsening debt.


Sorry – you are again missing the point – The ONLY way many people can get any sort of loan – because they live below the poverty line – is by “pay day loans” They have no choice – so it is really “starve today” or “starve tomorrow” If you have children you want them to have what other children get. – Or rely on charity – At least with pay day loans you CAN get enough money to buy items essential to today’s living that all advertising exhorts the vulnerable to buy. Stop the adverts – in the “old days” there weren’t so many thrust down your throats.

This country stinks – many low paid workers can’t earn enough to live properly – you try to pay £800 rent for a tiny flat (standard charge here) on an income of £6 an hour for a 40 hour week – yet the “do gooders” point out how idiotic they are to use the ONLY method open to them to get enough to live on .

How about a campaign to RAISE the earnings of the poverty stricken including pensioners??.

steve perry says:
27 December 2011

Richard, really?? Perhaps you should work for one of the lenders, you are a good advertisement for them. ‘they have no choice’ … ‘starve today or starve tomorrow’ – this is exactly the logic we are campaigning against!! What happens to that poor family, unable to put food on the table, living in poverty the day after they have to repay back the money they could never afford to borrow due to having NO choice, plus interest on top!

Your logic does not follow, you constantly babble on about how low paid workers cannot afford to live on a month to month basis yet promote a product that is only supposed to provide for those ’emergency situations’ that dont normally exist on a month to month basis. I am sorry but for these poor people you refer to – A payday loan is the worst possible loan they could take and quite simply those responsible lenders shouldnt be giving them the loan in the first place!


Exactly where do the poor people get the money they need to live????????? Give details – real details not “it is terribly wrong”

You are simply stating the obvious – that a pay day loan is a high interest loan – The point is it is the ONLY loan they can get. If they could get lower interest loans they would – They can’t.

The alternative is not pay the rent (eviction) – not pay for food (starve) – not pay for heat (freeze) not pay for clothes (ragged) come on what are the alternative???? Steal? Come on your suggestion??

I get seriously sick of those pompously stating “it is expensive” of course it is expensive – but I know many who cannot get enough money – their only choice is to have a short loan with a known total repayment – they can often get occasional unplanned overtime.to help . I’m waiting for an alternative – Banks won’t help nor will any loan agency except – pay day loans. If they did not work they wouldn’t exist legally – The Pay day loans are far better than illegal loans..

So Steve what is your wonderful alternative????????

The advertising for goods we are constantly bombarded with, is not just aimed at adults. With youtube having ads on music clips, on mobile internet devices, etc, children, teens, etc, are all being bombarded (where’s the regulator?)
This puts pressure and strain on many families, that at times such as Christmas, can push people into these expensive loans to bridge the gap in their finances.

Richard’s statement – The ONLY way many people can get any sort of loan – is by “pay day loans” They have no choice – so it is really “starve today” or “starve tomorrow” – has a point.
Low income earners are punished for loans at every turn.
Payday loans are expensive and continue to badger for new business
Similar to door to door lenders, its easy to get dragged into borrowing more

The alternatives, banks, credit cards, etc, charge higher interest rates (read penalise), harder to set up, but once in place, credit cards, banks and loan companies all badger for more business or raise credit limits. This is if they accept the application in the first place.
I don’t agree with variable interest rates. I want equality, if a company advertise they lend at 5% interest, then that should be applied to all.

Steve, its worth pointing out that 21 million people in the UK need to claim a form of tax credit.
As you say, “People in such a desperate financial situation have clear long term issues and taking out credit, particularly a form of credit that as you say is expensive cannot be the right solution” but the long term issues Richard pointed out in his first post – “many low paid workers can’t earn enough to live properly – you try to pay £800 rent for a tiny flat (standard charge here) on an income of £6 an hour for a 40 hour week – yet the “do gooders” point out how idiotic they are to use the ONLY method open to them to get enough to live on “ often leaves many people with no option but to take out a payday loan.

Everything today is paid via bank accounts, when you haven’t got the money to cover your bills and they are due out of your account, you get charges. Have you ever tried asking your bank for a £100 overdraft when you have bills coming out and irregular income?
I don’t think Richard is promoting payday loans at all, merely pointing out that many people don’t have an alternative.

Frugal – That is EXACTLY right.

steve perry says:
27 December 2011

Right ok so we have this poor poverty ridden family, who cant afford to pay the rent, or buy food, nor pay for heating and clothes – and you want me to solve all of their problems on here? Seriously if I could do that, the I am in the wrong job! perhaps they should do more of this often occasional unplanned overtime to help?

I don’t have all the answers but that does not mean we cannot criticise the payday loan industry because of that. What annoys me is that the examples you use are people who seriously seriously should not be taking out payday loans! People in such a desperate financial situation have clear long term issues and taking out credit, particularly a form of credit that as you say is expensive cannot be the right solution.

More to the point I find it disturbing that a so called responsible payday lender can look at an applicant who is clearly suffering long term cashflow issues, yet find it totally acceptable to lend money to them on the provision they might be able to get some unplanned overtime!

It is not good enough Richard, not good enough at all.

So you can’t offer a viable alternative

I thought so

Pay day loans are the only loan system available for them.

‘only loan system available for them’ whose them ? Why not you ?

Even Payday loan companies point out their lending is for emergencies only, they should not be used for everyday living. Of course there are alternatives, support your local credit union and if there isn’t one put your time to good use and help set one up.

DebtWizard says:
28 December 2011

The point Martyn is making is the way Payday lenders target those through relentless emails and texts. He also highlights the extortionate interest rate, in Australia and New Zealand which is capped at around 48% as against several thousand percent in the UK.

Payday loans are banned in around 13 states in the US because of the way lenders rack up the interest rates once a borrower falls behind with the payments. Should we think of banning them here as well?

The bottom line is that a Payday loan is really only suitable for those looking to pay back after just a few days. Beyond this the cost to the borrower can be obscene – miss a payment or two and it gets out of control. So the moral of the story is, if you need to use one, do what you’re supposed to do and pay it back in full on payday, but let’s not forget the excellent article from Martyn about the dangers of such a loan.

An excellent and very timely article, given that this is the time of year that many household budgets are under pressure thanks to the added costs of the Christmas season.

CCCS is using Twitter to try and show the scale of the problem of unsolicited text messages from debt management and loan companies, by encouraging people to tweet using the hashtag #debttext if they have received one of these messages – see http://twitter.com/#!/search/realtime/debttext for responses so far.

Not a bad summary of the piece above

Teresa Fritz says:
29 December 2011

I’d like to echo Phil’s point about there being an alternative to pay day loans in the form of Credit Unions. Credit Unions charge reasonable rates for short term loans (often no more than 12% a year – but some are higher), however interest is charged on your reducing balance. Unlike many lenders they will lend small amounts of money for short periods and whilst they do look at your credit history, they aren’t necessarily frightened away by a poor one. Many Credit Unions can offer money advice and debt advice as well as basic bank accounts, savings and even mortgages. They are at least worth a look before approaching a pay day loan company. They won’t be the answer for everyone, however, so I think we have to accept that pay day loans are here to stay, but surely we can lobby for the extortionate rates of interest they charge to be brought down, and to make sure they are properly regulated. The industry is currently steeped in bad practice and that is what Which? is trying to change. We all agree that people on low incomes need access to short term, fair value lending but whilst pay day loans currently meet the short term need, they are very far from fair value. It is up to organisations like Which? to highlight bad practice and to try and bring about change – so well done them.

It is up to organisations like Which? to highlight bad practice and to try and bring about change – so well done them.

With respect, organisations like Which? shouldn’t need to highlight bad practice – regulators being paid millions every year should be monitoring and acting.
As is more often the case, the regulator won’t act (most won’t even comment) unless the number of complaints hits the thousands, and even then they only act if it’s a publicity coup for them.

The people of the UK are in a bizarre situation in all fields of regulation, in that the public don’t actually have any regulatory body that will take up their individual case!
The regulators will not act on individual cases, instead referring people to yet another taxpayer funded body, which also won’t act until they get significant numbers of complaints about the same issue/company.
The onus is always put on to the people and the only avenue left to them is either to learn a lesson from the practice or take out a small claims action and argue their case themselves, which most cannot/will not do. This is despite many practices being against the laws of this land.

Business practices needs to be reigned in, marketing is king and those in power/regulation seem oblivious to the damage it is doing to the people.


The people I try to help find that credit unions refuse to lend them money – because they have no money – no collateral and have serious long term debt problems – So credit Unions do not work for the people I help – we are obviously dealing with two different sets of people. My set is the truly poverty stricken living in horrendous conditions well below the poverty line often due to intellectual disability.. The area is the lowest slum area in London.

The only alternative apart from pay day loans is going bankrupt – which is a second chance – but they “only” then suffer from the stigma of being a bankrupt for five years. – and most loaners consequently refuse that second chance because the bankrupt didn’t pay the money back. It does nothing to stop the origin problem – most cannot earn more money but their income is below the poverty line.

The advantage of the pay day loan is the lender knows how much they need to pay – for how long – until the loan to be paid back. So they CAN reduce the loan size over time. This is far better than the old Illegal Loans which were and are still in existence. The people I work with are aware that there are disadvantages but can often use occasional overtime or addition work to have a tiny surplus.

I really am surprised at the pontificating by those obviously not being at the pay loan situation. The solution is obvious those people who apply for pay day loans need more money for the job they actually do – Remember they are in jobs well below the poverty line.

It would be easy for me to pontificate too – but obviously I’ve spent over 60 years helping the long term poverty stricken to survive – not ignoring the problem.. Sadly I would laugh if it happens to you

Richard, I have to ask the question, is the huge interest rates charged by payday loan companies justified?
On the one hand, I can see how people living week to week, on the breadline, etc, need an option to borrow money now and again, but fail to see the interest rates charged helping anyone but the payday loan company’s profits.

Why don’t the payday loan companies offer lending at say 10 or 20%?

Frugal – The first sensible question

Obviously the interest rates are high – but too high?? I’m am fairly sure the reason they are high is simply because they are very high risk – that is they have a high risk of not being paid back – This is the reason the others will not take on the borrowing in the first place

The interest rate charged reflects the risk taken – as with all loans – these loans are meant to be short term only.

Quite frankly if a pay day loan company charged 20% – all the poverty stricken living below the poverty line would queue up to borrow from that company – it’s cheaper.

The good thing about present pay day loans is that the total is known up front – and as the total amount is chosen by the borrower they have a better chance of redeeming the loan.

steve perry says:
31 December 2011

The first sensible question … sigh, I worry for the direction of this thread.

High interest rates because the loans are high risk, because there is a high risk they will not be paid back.

So what we are suggesting is that these poor people on the poverty line, in fact no sorry below that line should be offered a form of credit they are not likely to be able to repay, but then charge them a higher rate for their troubles too. And this is supposed to help them how exactly ???

Paying a tonne of interest to a payday loan company is NOT a solution for someone on the poverty line, not even close !!! Despite what you say Richard there is nothing good about present payday loans, nothing at all.


Sadly there are NO form of credit as you suggest – and with this “government” it is unlikely to happen – So what do they do in the mean time? Become homeless – starve – freeze to death????? Pay Day loans are the only alternative. UNTIL a better system arrives – what should happen is raise the minimum wage to above the poverty line. I’ve never said it was good – but it is the ONLY alternative.

If it isn’t – give an actual alternative

steve perry says:
31 December 2011

Ok lets see alternatives alternatives …. ok how about this, instead of a one month payday loan, the borrower can take out say a 6 month payday loan, paying it back down in monthly installments with a fixed interest of 10% … i.e;

Borrow 200 pounds, total repayment will be 220 split between 6 months at monthly payments of 35 pound or whatever it works out as.

That way that ‘immediate jump in rent’ can be fixed instantly, without a huge knock on monthly effect, just the 35 pounds and it wont cost them a fortune, which is good because they are poverty stricken and the last thing they need to do is pay out a tonne of ‘dead money’.

How does that sound ?

I don’t buy this “higher risk – higher interest” justification at all, not from payday lenders, not from banks, etc.
I’ll tell you for why… Very few people are actually able to avoid paying a debt. The criteria for collection is loaded in the business’ favour.
To avoid paying a debt, an individual would have to avoid any other lending, any credit cards, any bank account, any council tax payments or rent, whether council or private, any wages or benefits, etc, for six years.
Businesses know this full well.

If someone borrows money/buys a product and does not pay it back, as agreed, charges are heaped on (unenforceable more often than not – that’s for another thread) interest is added, even when cases have been ruled upon in small claims court and a judgement passed, interest and costs are often added during collection (even when refused by a magistrate!)
Failure to pay or being unable to clear the debt in a timescale suited to the business, is sold on to debt collectors, for around 10% of the actual amount outstanding.
This is why the original business heaps costs, charges, interest onto the debt and sells them off in blocks of accounts. It helps them recover more in the quickest time possible. Remaining amounts that are deemed to be “lost” in this process, often, the original business will then claim the remainder via business insurance.

Businesses doing the lending cannot lose!

It is discrimination to charge two people two prices for the same product/service. If a business is going to lend £100 it should charge each of them the same. The same recovery criteria applies, the same court system deals with them both, the same laws apply, etc.

Take for example two homeowners – both take out a loan secured on their home – person A is charged a higher rate of interest for the loan than person B, why?
They both have an asset that can be claimed against should they default. The collection on a default is the same, the risks are the same.
Person A may have been late with their phone bill payments, yet they are penalised and discriminated against.

Now if laws/legal precedent really was enforced/regulated correctly, there would be genuine risks of money not being repaid and businesses losing out, this would in turn increase the business need for responsible lending, as for the first time in years they really could lose money.
In today’s world there is no risk at all for businesses, which is reflected in their often irresponsible lending.

“Obviously the interest rates are high – but too high??”
Yes they are too high.
One advert I spotted over the past week was for more than 1700% interest.
I believe the interest rates are set so high, as to enable the company lending to make even more profits than the original loan, when the person inevitably defaults.
Once unable to pay/defaulting, the interest is heaped on, charges are added and further interest is applied to the full balance, etc.

Before action is taken via the court – in the example I have seen advertised (1700%) – for each £1 owed £17 would be added to the balance!
How long does it take for the payday company to enforce a default judgement via small claims? 3 months? longer?
That’s a hell of a lot of money added to the account, plus charges, before a judge rules on it and a maximum of 8% interest can be claimed.
I wonder if the toothless regulator – the FSA – has even looked at exactly how many people borrowing from payday loan companies have defaulted?
Hence why low income households are being bombarded with advertising?

Perhaps you can clarify as you have experience in the industry – Is it more profitable for a payday loan company when a person defaults, or when they pay off their loan in full?

steve perry says:
1 January 2012

Spot on Frugal !!!

There is no profit for the lenders in lending to a person just the once, and then never again. For a lender to make any money it relies on a person repeatedly borrowing and this comes in two forms;

A) borrowing and then repaying in full, but then immediately borrowing again (usually at a higher amount)
B) Paying the interest only on the loan and not touching the original loan amount (the loan then resets itself for another month and the interest re-added onto the debt)

Both options have their plus points from a lenders point of view. If a person pays in full and borrows again, usually they can do so within hours of repaying their last loan, it is an even faster process as they are an existing customer with the bonus potential of the person borrowing more. With the person who constantly ‘rolls over’ the lender knows it is making excessive profit on such a small loan, i.e. a 200 pound loan with interest of 50 pounds can be ‘recovered’ within 4 months of rolling over without even touching the original loaned amount. I have encountered both of these with the payday lenders I used, particularly Wonga.Com for option A, and Payday UK for option B.

Furthermore the issue of defaulting. I have found through experience that the way lenders approach defaulting varies. In terms of excessive interest I can give you one very clear example. My last loan with Wonga was for 810 pounds and the initial planned repayment was 1050 pounds. Thats right, 240 quid interest on a loan for a few weeks!! Anyway I defaulted on this and wanted to set up a repayment plan, but to do so there was a ‘special team’ at Wonga that had to contact me, I tried their conventional customer services numbers but they couldnt transfer me through or give me direct contact details. It took 50 days for Wonga to contact me, 50 …. at which point that debt had apparently increased to over 1600 pounds! More than double the original loaned amount. It was a scandal, an absolute disgrace (I won though in the end!)

For a second example though, Pounds Till Payday. When I defaulted with them I owed 600 pounds, they added a 50 pound default charge on but admittedly did not continue to add interest. However they did state that they couldnt offer a repayment plan as they did not have the facility, they warned that after 30 days the debt would be passed to a debt collector but no further charges would be incurred. During this 30 day period they twice urged me to pay off the loan and immediately borrow again at a lower amount rather than defaulting, as a better alternative !!! If I chose their option it would have taken me months to scale the debt down, they would have made an absolute fortune off it. Instead I defaulted, it passed to a debt collector and I agreed a 10 pound per month repayment plan with no additional interest or charges ever to be added on. The difference in cost between defaulting and using the method Pounds Till Payday urged me to use is absolutely shocking. And I believe Richard agrees that Pounds Till Paydays method is the right way forward??

But in summary, absolutely, these companies WANT people to get trapped in a borrowing cycle or to default … it is the only way they can survive.

Instead of moaning you have no money try going without for a change .you have a choice,No I am not one of the rich ones but what is the point of going in to debt.They are the last resort I don’t need another thing to worry about.

First – I’ve personally never NEEDED a pay day loan – because I’ve had a good job and always lived within my means – which has always been enough..

The problem for the people I help is their choice is literally – borrow – or be evicted on the street – or starve or freeze on a daily basis because their income is below the amount needed to exist – not live – exist. Have you starved for a week?

I can only assume by your attitude you have never actually been in that condition – You try going without a home or food for a week. I really doubt if you have.

All that needs to happen is find your “buy to rent” landlord raises your rent with no opportunity to increase your income – indeed because of present circumstances you income is going DOWN. These people do not have items to pawn

So it is PAY or GET OUT – pay day loans allows one to pay. It is why 100s of 1000s of poverty stricken people are now using the facilities..

You are not one of them.

steve perry says:
31 December 2011

No Richard, again no !!!

I can see what you are saying about solving the ‘immediate problem’ … that first month when the rent is raised but what happens month two ??? That poor soul starts the month having to pay back the money borrowed plus the interest. That person is already starting the month WORSE off than the previous month, why? Because of a payday loan !!! What is the proposed solution for month number 2 Richard, when said person can’t pay the rent again because they started the month down on cash? Thats right, they take out a payday loan again, presumably for a higher amount to cover not only the inflated rent, but offset the additional cash lost from the last payday loan. What about month 3? Do they do it again, I would assume borrow a higher amount again. Month 4? Where does it end Richard. This pour lost soul ridden in poverty, what started as one problem becomes a rolling over cycle that if anything thanks to the mechanics of a payday loan will get worse with no reasonable solution.

How on earth does that make a payday loan a viable solution to that persons problem?? More to the point why in gods name are these lenders approving the loans !!!!


First remember that such loans were frequent in the old days too and used to be illegal – with no help – Now they are regulated – they can no longer send someone around your house to beat you up.

I have been helping people reorganize their lives for many years – but the short term high interest loan has usually been a part of the solution – as these people do not have any other method of getting any other sort of loan.

Frankly it is not a viable solution to starve or be evicted – but with very very careful management it is possible to often reduce other spending – so the amount borrowed goes down – reducing the loan required slowly – I know 100s of such people who managed.

To denigrate a system which works by careful management – and it usually does – without offering an existing alternative is totally pointless. .The downsides of the existing system is well known – but the only existing alternative is bankruptcy – frankly I think that is far worse.

steve perry says:
31 December 2011


You are correct …. after my 65 payday loans and finally defaulting on a dozen lenders I didnt get visited by baseball bat wielding thugs, instead I got met with extortionate charges (on top of the massive amounts of interest already paid) …. to be quite honest, I would have rather taken my chances with the thugs – would have had a better chance of survival. Besides being ‘beaten up’ is all relative – payday loans almost killed me!

I do not agree that high interest loans could possibly be part of a solution, particlarly when you follow it up with very careful management of reducing other spending – I thought you said these guys were below the poverty line, often unable to pay rent, buy food or pay for heating – your solution is to cut back on these to manage the costs of a high interest loan ?!?!?! Sorry but no.

And my experience has taught me of the many many faults with the existing system, and to simply state that because I personally cannot offer a viable cast iron concrete alternative solution should mean I have no right to denigrate the existing system is lunacy.

Besides I gave you the 6 month payday loan alternative further up the comments – what do you think of that one ?!

President Obama has been working really hard to try and get reelected this year. A part of that campaign has brought on him to make many things look “Evil” including payday cash advances. If he were to get rid of payday lending, low- and middle-income individuals would be the individuals hurt by it. Payday loans are usually less expensive than credit cards and bouncing a check. It is a great source for crisis cash when someone needs a little bit of help.

Richard Hughes says:
28 June 2012

Whilst I can see what the article is trying to get at in terms of the aggressive marketing strategy that follows the repayment of the loan, why would someone take out a loan when they didn’t need one simply because they could save 20%.

Personally I feel that payday loans can be a great way to navigate a difficult financial situation providing that they are used correctly.

[This comment has been edited to remove promotional material in line with our community guidelines. Thanks, mods]

The post above is clearly promotional spam and should be ignored. It has been reported.

23:22 on 29:11:15

I reported it too, John. I seem to remember a similar one posted on an earlier conversation – was it the same? Which? have dealt with it but it managed to last the weekend. I doubt many convo subscribers would take any notice of it though?

+ 1


The trouble is that now the offending post has been removed, it looks as if John is referring to Richard’s post. Perhaps it is best just to report dodgy posts and say nothing.

12.10 GMT; 30/11/15

+ 1

STILL there, so I’ve reported it too.

Hi all, thank you for reporting the spam comment which appeared over the weekend promoting a loan lending business. As you can see this comment has been removed from the thread. The above comment from Richard Hughes has also been edited to comply with community guidelines. Thanks once again