More than a million people are considering taking out a payday loan to cover the cost of Christmas, according to research by a government-backed organization Financial advisory service found.
The Monetary Advice Service (SAM) said that one in 40 (2.44%) people polled for their research, or around 1.2 million in the UK, are considering turning to a payday lender to fund their seasonal spending.
A third (32%) of consumers also said they would increase their credit card debt to pay for the festivities, while one in 11 (9%) said they always pay back what they owe to them. Last Christmas.
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The results suggest that people will try to reduce their spending compared to last year. People generally expect to spend £ 487 this Christmas, which is £ 21 less than when similar research was conducted in 2012.
Two-fifths (38%) of 2,000 people polled this month said they were already worried about how they will meet the costs.
Research by MAS, an independent body created by the government, found that the pressure to please other people and their loved ones was the main reason for overspending at Christmas, followed by the desire to give children a perfect Christmas and the temptation of special gifts. offers.
Jane Symonds, Head of Service Delivery at MAS, said: “Christmas is an exciting time to reunite with family and friends, but can also be a financial worry and very stressful if money is tight.”
A crackdown on payday lenders has taken place to prevent consumers from spiraling into debt, with new restrictions proposed by the Financial Conduct Authority (FCA) to require lenders to place “risk warnings” on their loans. promotions and advertisements.
Lenders will only be allowed to roll over a loan twice, and they will only be able to make two failed attempts to collect money from someone’s bank account under the proposed new rules, which will take effect next year. .