26 per cent of Southampton families slammed by problem debt

Southampton households have one of the highest rates of payday loan usage in the country. It is no coincidence that the rate of financial failure has gone up as a consequence.

The status of payday loans as being an acceptable form of regular financing is ringing alarm bells at the local council and across higher levels of government. Officials are concerned that the region is showing signs of greater distress that could be repeated in other locales.

The concern is that payday loans are gaining in acceptance across younger citizens that lack the traditional financial values of their ancestors. In their rush to live in the moment, many are racking up huge debts that are nearly impossible to repay at the current terms.

To emphasise their point that young people are far too familiar with payday loans, The Children’s Society released the results of its YouGov survey. It claims that 77 per cent of families would support a ban on payday loan advertisements before 9pm. Why are they so keen on preventing the ads from being viewed by children?

The survey results revealed that 93 per cent of teenagers could name at least one payday loan company. The name recognition was shocking. Of those children who were surveyed, 34 per cent enjoyed watching the ads, believing them to be fun and entertaining.

The Children’s Society would like to have payday loans grouped into the same socially unacceptable categories as cigarettes and gambling. They argue that payday loans are just as damaging to the financial health of consumers as those other vices are to their physical health.

While the ban is sought nationwide, the story reveals just how bad things are getting for families in Southampton. Southampton Itchen leads the way with 26 per cent of its families struggling with problem debt. The situation is not much better in Eastleigh and Southampton Test. Such reliance on predatory loan products is not sustainable. It leads to evictions, problems paying tax and an over reliance on social welfare programmes.

Officials are quick to note that families experiencing a financial crisis should first request assistance through a money advice service or at their local council. Often a grant or interest-free loan can be provided to get them through a financial emergency. While some families are too embarrassed to seek help, it sure beats paying nearly 2,000 per cent APR on some payday loan.