Switching on the television may be a good way to gauge how the economy is doing. In the UK, every third TV ad seems to be advertising either a payday loan company or a pawnshop. Perhaps it’s a reflection of the television channels that I choose to watch, but it’s also probably a reflection of how desperate some people are. After all, these advertisers would not pay money to appear on television, unless they think there is a susceptible audience in front of the television sets.
The interests charged by some of the payday loans companies are truly exorbitant. The APR is often over 1,700% and sometimes over 4,000%. Given Christmas is approaching, when there are often extra increases in household expenditure, it wouldn’t be surprising if more people were to resort to borrowing money at huge interest rates. The fact there is a large market for these operators probably demonstrates that the banks are not offering the kind of overdraft facilities that people sometimes need to dip into.