Poor forced into unpayable debt with huge interest rate on loans

AS MANY as 2.3 million people on low incomes in the UK are taking out loans with interest rates as high as 183 per cent APR, a charity said yesterday.

Save the Children is asking the government to tackle poverty by spending 4 billion to support the incomes of the country's poorest families.

In a report, the charity said it also wants grants of 100 to be given to each child living in poverty every summer and winter.

The report's author, Jason Strelitz, said: "We have found that there are two times in the year when families are most likely to need extra cash - during the summer holidays when children are off school and need extra meals, and at Christmas when the heating has to be on all day."

He said these grants could lift up to 440,000 children out of poverty.

The report shows how easy it is for parents struggling to provide basic essentials to be tempted into "unpayable debt".

Mr Strelitz, Save the Children's UK poverty adviser, said people on low incomes are often unable to obtain credit from banks and cheaper lenders because they are considered too high a risk.

"The core problem is not the companies themselves, but the poverty that forces people to use them," he said.

He said lenders which offer credit to low-income families include Provident and BrightHouse.

Provident provides credit and collects repayments door to door, and also through its website - which is upfront about its 183.2 per cent APR.

BrightHouse sells household goods on weekly payments. Its website says its typical APR is 29.9 per cent.