So easy to be lured into debt this Xmas

Cllr Barbara Weed (Lab, Leamington Willes), who lives in a high rise block of flats in Lillington, was infuriated to receive a letter offering her extra cash to make the festive season special.

Especially as the small print showed the annual percentage rate (APR) for interest would be practically 400 per cent a year. Some companies are even higher than that.

Cllr Weed said: “I expect many people received the same letter from Provident Cash Loans and some will have been desperate enough to borrow money they simply cannot afford to pay back quickly.

“These companies make it all sound so easy but a reasonable interest rate would be between eight and 15 per cent a year while taking a loan from the Provident would cost 399.7 per cent.

“That means if you borrow £500 and can’t pay the loan back quickly then repayment debt collectors will be calling at your door every week for months, or all year. And if you do take 12 months to repay the money you will actually have to pay a total of £1,077, which includes £577 in interest - which means you still won’t be able to save any money for next Christmas.”

Olwyn Ditchburh, who manages six Surestart children’s centres across Leamington and Warwick, organised a debt conference in October at which many of the victims of high-interest loans spoke out about the spiral of difficulties they’d got themselves in to.

It’s a subject the Government is due to introduce new legislation on - capping the levels of interest companies can charge and encouraging a greater use of locally-set up Credit Unions.

Mrs Ditchburn said: “Parents in Leamington and Warwick tell us on a daily basis about the devastating effects debt is having on family life. Sometimes families feel they have no choice.”

A spokesman for Provident Cash Loans defended the interest rate charged and pointed out the company’s 130 year long record of collecting directly from customers’ homes.

He said: “The customer pays an up-front single charge which is added to the principle sum - over 90 per cent of our customers say they are satisfied.”