Friday, January 15, 2010
The Real Cost of Christmas
Thousands of households have taken out loans with interest rates averaging 825% during "the worst Christmas in a generation"
The Real Cost of Christmas, commissioned by affordable housing provider Circle Anglia and written by the Financial Inclusion Centre, found that more than 100,000 of the UK's poorest families will spend 2010 crippled with a combined debt of around £82m after borrowing money from loan sharks to pay for Christmas.The report says that on average people borrowed nearly £300 with an average repayment period of one year.The value of the loans is an estimated £29m, but average interest rates of 825% will mean that people end up paying nearly three times the initial amount they borrowed.
The report found that illegal loan shark activity is on the rise. Over the past three years the estimated use of loan sharks increased from 165,000 households a year to more than 200,000, a 22% rise. Christmas time accounts for up to half of those loans.