3 September 2008
Consumers struggling to meet day-to-day living costs could find that credit cards provide a better solution than short-term payday loans, it has been suggested. According to an article published in Wales on Sunday, hundreds of Welsh people are resorting to payday loans to tide them over during difficult financial periods. However, many do not realise that they could be paying interest rates of up to 190% if they fail to repay the loan on time, the newspaper claims. It states that an investigation by Wales on Sunday uncovered widespread ambiguity around the actual annual percentage rates charged by payday lenders. Rhys Evans from the Welsh Consumer Council told the publication that he would advise against using payday loans, especially if the level of interest is not completely clear. Instead, Wales on Sunday suggests that shopping around for a credit card could be a better option. "The loans seem like a quick fix, but often credit cards and bank loans work out cheaper in the long-term," the newspaper states. Recent research from uSwitch.com revealed that credit card lending has increased by around £179 million per quarter over the last 12 months.