Rule Britannia, Long Live the Queen! But would you get in debt for her?

Posted in 'Personal Finance' by Jessica Searle

06 June 2012

With the very welcome Jubilee bank-holiday now behind us, how do you pay for your celebrations?

Some pay-day lenders have come under fire from MPs, the BBC and other campaigners as encouraging the “irresponsible” use of these short-term high-interest loans for rather fickle reasons. An overzealous poster on the Payday Bank blog gave a description on how the money could be spent, suggesting that customers celebrate the Jubilee in style – stating "If you want to boost your Jubilee spending pot, a same day loan could provide the cash you need." With the Actual Percentage Rate of interest (APR) being quoted as a variable rate of 1,737%, this would result in a loan of £180 costing £45, if paid back in full within 28 days. A right Royal sum indeed.

This blog has now been removed, with the company stating that it was written by a third party, which slipped through the net. A spokesperson for Payday Bank said it did not “feel this was acceptable content and is not up to the standards we set ourselves with regards to responsible lending and brokering.”

This comes after other companies have been criticised for promoting the use of these loans to fund High-Street shopping sprees and even cosmetic surgery. Ukpaydayloans.net and nadineloans.co.uk have recently removed photos of young women laden with shopping bags from their sites, as reported in the Financial Mail, even leading to affiliated companies removing their associations with them.

There is an increasing clamour for more rigid regulations of pay-day loan companies, to prevent them from promoting their services through inappropriate forms of media, such as blogs, which increases their visibility and is claimed to result in pay-day loans being used as a long-term solution to financial difficulties – not to cover the short-term financial stop-gap to which they are best suited.

As we have previously reported, Stella Creasy, Labour MP for Walthamstow, is campaigning for more regulation against the companies, saying, “We need caps on the costs of credit to give British consumers the same protection that others around the World enjoy from these companies.”

The belief that the recent actions of these 'legal loan sharks' are eating away at the finances of the population is increasing. Could they have really been trusted to help their customers have a glorious Jubilee weekend, when using a simple credit card is quicker, and often much cheaper?

Jessica Searle is a Credit Analyst at checkmyfile and has a degree in English Literature from the University of Exeter. You can contact her at jessica.searle@checkmyfile.com