Martin Lewis has issued advice to families turning to payday loans as cost of living crisis bites.
A new survey has found surging energy, fuel and food costs coupled with worries about paying household bills is leading to a spiralling demand in interest for payday loans to make ends meet.
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For some they offer lending of last resort which, used right, can solve unexpected holes in people's finances, although according to Money Saving Expert Martin Lewis, many of these loans have been handed out irresponsibly and mis-sold to those who can't afford to repay, ChronicleLive reports.
Citizens Advice agrees with Martin Lewis that payday loans are almost always a bad idea, and have warned against people seeing them as a quick fix to solve today's problem.
Martin Lewis has advised people to try the following ways to raise short-term cash before applying for a payday loan:
- A credit card offers interest-free spending, if you pay it off in full. A 0% card gives you even longer to pay with no interest.
- Check if you're eligible for a 0% government budgeting loan of up to £812
- Ask family for help
- See if your local credit union will offer you a loan
- Look into extending your overdraft - it's usually cheaper than a payday loan
And if you are still determined to get a payday loan, he advises the following:
- Borrow as little as possible and budget to pay it off as soon as you can
- Don't take out a payday loan to repay another. If you're regularly getting payday loans there's a problem
- Always check a lender is registered with the Financial Conduct Authority (FCA). Payday lenders can be bad – loan sharks are MUCH worse
