/ 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.


Hi Richard – thanks for your comments. The point I’m making in this Conversation isn’t whether payday loans are a good or bad thing per se. What I want to draw attention to is that, having taken out and repaid one payday loan, I am now bombarded with advertising, including emails, letters, texts and phone calls. Many people who have needed a payday loan in the past may feel pressured into taking out another one, particularly where time restrictions are placed on special offers. This sort of advertising could mean that some people who would otherwise shop around for the best alternative (such as an authorised overdraft or credit union loan) do not do so, as a ‘quick and easy’ payday loan is offered on a plate.

Just because you’ve taken out one loan, does not, in my opinion, mean you should be hounded day and night by that same company, regardless of whether a payday loan was a good or bad choice in the first place.

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.


Thanks for your comment Matt – I had meant to add the #debttext hashtag, so thanks for adding it here. Following #debttext on Twitter over the past week suggests this is a widespread problem, not just regarding payday loans but also claims management companies and other such operations.

It’s a timely reminder to always tick the ‘no advertising’ box whenever you apply for any sort of credit – you never know who they’ll sell your details to. In one loan application for my research, there was no privacy box to tick – within a couple of days I’d received around 50 direct emails offering me loans etc, with many lenders outside the UK and therefore outside the scope of the Financial Ombudsman Service.


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.