The strong public support means the plea for tough action against the “legal loan sharks”, including a ban on new stores, will now be debated by councillors next month.
Lothians Labour MSP Kezia Dugdale launched the Debtbusters campaign in January after being contacted by constituents who claimed they were being ripped off by firms charging up to 4200 per cent interest on short-term loans.
Backed by Citizens Advice, the Church of Scotland and the STUC, the campaign is calling on the council to run a city-wide drive highlighting the dangers of payday loans, reject all new planning applications for loan shops, and follow Dundee City Council’s move to block access to payday loan company websites in all council buildings and libraries.
Ms Dugdale said: “The fact we have double the number needed shows people really care about this issue. They’re angry that these companies are making profits out of other people’s poverty, and I’m really hopeful the council will now act on this.”
The use of payday loans has increased during the recession, but their rates are far more expensive than high street banks. For example, it may mean if £10 is borrowed for ten days, around £17 would have to be paid back, rising to around £22 over 40 days. A loan of £400 would cost nearly £580 to pay back over 40 days. Debt can spiral rapidly if repayment dates are missed.
Marlene Shiels, chief executive of the Capital Credit Union, said the current economic climate had left more people in real difficulty when faced with unexpected expense.
She said: “We see it every day – the car breaks down or the washing machine breaks down and very few people now have savings they can fall back on.”
She said credit unions were offering an alternative to the payday loan companies. “When you go to a payday lender, you get the first loan and it has to be repaid in 28 days, but people are just not in a position to pay it in full, so they roll it over and once they get into that spiral it starts to cost them really extortionate amounts of money.
“With our product, they can phone and say they have an emergency and if they are an existing member they can get a loan that day of up to £500, but we give them six months to repay it and we charge 24 per cent.”
Rev Sally Foster-Fulton, convener of the Church of Scotland’s church and society council, said: “The church is very concerned with the consequences of having unregulated payday loan products promoted by what are essentially legal loan sharks. Payday loan companies pretend to be a solution to people’s financial problems when the truth is they cause more and solve none. We hope Edinburgh council will be the first of many local authorities to take up this cause.”
The call for action is to be considered by the council’s committee on April 18.