StepChange Debt Charity welcomes Scottish Government announcement on payday loans and urges Scots struggling with repayments to seek help

7 February, 2013

StepChange Debt Charity today welcomes the news from Fergus Ewing MSP, Minister for Energy, Enterprise and Tourism, that the Scottish Government plans to make changes to the Debt Arrangement Scheme to assist people who have payday loans.

The charity has seen a dramatic rise in Scotland of people seeking help with payday loans, with numbers jumping five-fold in two years.

Over 1,000 Scots (1,171) received debt advice from StepChange Debt Charity about payday loans in 2012, up from less than 300 (246) in 2010.  The average value of their payday loan debt increased in the same period, to £1,665.13 in 2012 from £1,060.85 in 2010 – an increase of 57 per cent (£604).  Conversely the charity found credit card and personal loan debt among its clients declined significantly in that time.

In 2012 StepChange Debt Charity clients in Scotland needed help with almost £2 million (£1.95 million) of problem payday loan debts, up from £260,968 in 2010, an almost eight-fold increase.

StepChange Debt Charity warns that payday loan debt can spiral quickly if repayment problems are not dealt with.  It urges anyone in difficulty to seek free debt advice from a charity such as itself.

Sharon Bell, head of StepChange Debt Charity Scotland, said:  “We welcome the fact that the Scottish Government recognises payday loans can be a problem and is taking some action.

“The dramatic rise in problem payday loan debt in Scotland is alarming as this type of debt is expensive and can quickly spiral out of control.

“It’s crucial that anyone struggling to repay what they owe at the end of the month doesn’t just roll their loan over and rack up very high charges, but takes control and seeks advice from a debt charity instead.”