LOCAL SDLP councillor Deirdre Mayo has warned of the dangers of getting into debt this Christmas.
With the long-lasting recession taking its toll, many may turn to borrowing to give their loved ones the Christmas they were used to a few years ago when times were much healthier.
“Borrowing money is all very well if you can afford to pay it back,” said the Cookstown councillor.
“People need to be mindful of that if considering borrowing at any time, not just Christmas time.”
“Unfortunately for some already in financial difficulty they may be tempted to turn to these Payday Loan companies.
“If payments are missed customers can see their debt very quickly mount up.”
“These companies are currently charging an APR of anything up to 4,214%,” said Councillor Mayo.
“When you think that we consider debt on a credit card as being high at an average rate of 20% APR, it’s amazing that we tolerate interest rates in the thousands.”
The SDLP representative said the high interest loans are hitting the most vulnerable in society.
“And with the introduction of the Welfare Reforms and families only getting a single payment a month, these people may find themselves in need of short-term borrowing,” she said.
“So the least well off are going to be hit the hardest with these sorts of interest rates. Surely it is morally wrong to feed off the weakest in society?”
Last week Lord Parry Mitchell tabled an amendment to the Financial Services Bill in the House of Lords relating to the capping of these interest rates that are currently being charged.
The government has now agreed to look at high interest loan companies and make an amendment in the third reading of the Bill.
Councillor Mayo says the best way to counter such companies is to “promote a better alternative”.
“Banks, Building Societies and Credit Unions all do personal loans for under 13% APR,” she added.
“By making personal loans more accessible then people wouldn’t need to go to Payday Loan companies.”
The councillor continued: “Another worrying side to this story is that figures released recently show that stress due to debt is increasing in our society.
“Stories of people initially borrowing £100 and ending up thousands of pounds in debt is becoming all too familiar.
On the website of Suicide Prevention Ireland is says; ‘Suicidal thoughts are distorted ideas due to stress, they are not reality. Do not let them fool you!’
“It would be hard not to feel stressed if your debts were rising like that.
“Anyone who is feeling stressed by their financial situation should seek help from some of the agencies out there who offer free debt advice, such as Citizens Advice and Debt Advice NI.
For more help and advice on money problems Martin Lewis, Money Saving Expert’s website www.moneysavingexpert.com