Payday loans become even more popular

The number of people taking out a payday loan in the UK has quadrupled in the last four years.

According to research by watchdog Consumer Focus, 1.2 million people are taking out a payday loan every year, borrowing up to over £1 billion.

With the popularity of payday loans increasing, Brits are being advised to turn to these loans as a product of last resort as interest rates may not be as competitive and as consumer debt can increase rapidly if the loans are rolled over.

With some companies charging over 2,500 per cent a year on interest rates, Consumer Focus is urging the industry to introduce more protection for borrowers.

Sarah Brooks, head of financial services at Consumer Focus, said: ”Payday loans are a valid form of credit and it’s much better for people to take one out rather than go to a loan shark.

“But we do think there needs to be a limit on the number of loans people take out and how many loans they are able to roll over.”