A recent report has highlighted how many households in Wales are at risk of falling into crippling levels of debt by using loans with soaring rates of interest in order to fund the cost of Christmas this year. In the current financial climate many people will struggle to find ways to pay for gifts and special food or entertainment this year and a large number are expected to turn to payday loans, which traditionally come with sky high rates of interest.

Debt charities and politicians have called upon the government to take measures to stop firms from using unscrupulous tactics to tempt vulnerable consumers into taking out loans with extortionate interest rates, which can quickly lead to spiralling debt levels. Many of these firms focus on low income households who will be easily enticed into taking out loans for a quick fix at a time of year such as Christmas.

This year has seen complaints about these types of loans more than double and officials are now concerned that many households in Wales will find themselves falling into unmanageable debt by turning to these lenders over the festive season only to realize in the New Year that they have got themselves into a vicious cycle of debt that becomes very difficult to escape.

One official pointed out that it is also more difficult for consumers to get help if they struggle with payday loans, stating: “With most lenders, when people say ‘I’m going to get help from a debt charity’, the lender would usually work with that person and work the situation out. That isn’t the case with payday loans. They are treating people abominably. It is an abominable form of credit – the loan from hell.”

Tags: large number, Wales, vicious cycle, rates, new year, Business Finance, Finance