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Payday loan problems grow fastest for under 25s

27 February, 2013

The growing problem of payday loan debt is being felt more acutely by the under 25s than any other age group according to new findings from StepChange Debt Charity. Analysis of the charity’s clients shows that the percentage of under-25s struggling with payday loans is growing at a much faster rate than for any other age group.

Under 25s most likely to have payday loan debts

Forty-two percent of StepChange Debt Charity clients under the age of 25 had payday loan debts in 2012. In 2011, this number stood at 25 percent, and in 2010 it was just ten percent.

Analysis of older age groups shows a significantly smaller growth in the percentage of clients holding payday loan debts. In 2012, just 22 percent of people aged 25-39 had payday loan debts, up from 11 percent in 2011, and five percent in 2010. While 11 percent of those in the 40-59 age bracket had payday loan debts in 2012, up from five percent in 2011, and two percent in 2010. Of those clients aged 60 and over, just four percent had payday loan debts in 2012, up from one percent in 2011, and one percent in 2010.

Payday loans are a great share of problem debt for under 25s

Payday loans now represent the third most commonly held debt among the 18-25s, behind credit cards and personal loans. In 2011, payday loans represented the fifth most common debt held and in 2010 the least common. 

Whereas, last year payday loans represented the sixth most common debt held by those aged 25-39; the seventh most common for the 40-59s; and the least common debt among the over-60s.

Amount owed on payday loans continues to grow among under 25s too

Compounding the problem of payday loan debts for the under 25s, the average amount owed on payday loans by this age group also continues to rise. In 2012, the average payday loan debt of clients under the age of 25 was £1,375. This was up from £1,032 in 2011 and £875 in 2010.

Commenting on the findings, StepChange Debt Charity external affairs director Delroy Corinaldi, said: “The significant leap in the percentage of clients under-25 holding payday loan debts and the increasingly prominent position of payday loans in the debt mix of young people is a deeply concerning trend.

“The under-25s are facing an unprecedented mix of high unemployment, rising living costs and a lack of access to affordable credit that means that payday loans are often seen as the only available option for the young”.

Contact the the StepChange news team on:

Tel: 0207 391 4583

Mobile: 07950 469 101

Email: press@stepchange.org

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