Call to cut charges for payday loans

THE “ludicrous” interest rates charged for some payday loans should be curbed by law, the SNP has said.

MEP Alyn Smith said some of the providers charged interest at an annual percentage rate of more than 4,000 per cent.

He said other countries in Europe and the majority of US states had taken action to limit the charges, and he called on the UK government to do the same.

Mr Smith said: “Many payday loan companies are targeting hard-hit, vulnerable Scots who are in need of a little extra cash in the run-up to Christmas.

“Far from helping, though, these sort of loans often lead people deeper into debt, with more severe financial difficulties.”

Margaret Burgess, the SNP MSP for Cunninghame South and a former director of Citizens Advice Scotland, has lodged a motion for debate at Holyrood on the issue.

Housing campaign group Shelter Scotland yesterday highlighted the “extremely worrying” number of people resorting to “quick fix” payday loans or other forms of credit to pay their rent or mortgage.

The charity estimated almost one million people in Britain had taken out a payday loan to meet their housing costs in the past year.