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Remove law that says payday loan providers can charge whatever interest rates they like

Comment 9th August 2010

How is it that the poorest people end up paying the most for credit?? I understand that having less money makes you a higher risk to a lender and therefore they need to charge an interest rate to reflect that risk. However, when someone needs to borrow £100 to see them through to payday (to buy food or electricity) it is wrong that lenders are allowed to charge APRs of 3000% for the essential loan. I think it's really bad to have it dressed up as 'it's ok that it's 3000% APR because you are only borrowing over a couple of days' because at the end of the day it's still 3000% over the year. Plus, it's far too easy to get these sorts of loans. When will the APR stop – when it reaches 10,000%?!

This especially annoys me when you see top lenders like Capital One offering credit building credit cards at sensible APRs of around 34.9% which could be used to see people through to payday and help to build credit ratings as well, paving the way for cheaper credit in the long run. How can the Government allow aspects of The Consumer Credit Act (which is there to protect consumers) to let consumers down so much especially when most consumers are calling for fairer access to reasonably-priced credit?

Why does this matter?

UK consumers are being forced to choose between paying 3000% APR to borrow some money for life's essentials or to go without. It is also an indication that the Consumer Credit Act is failing UK consumers and should therefore be changed to better protect us.


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