Payday loans and pensioners; why is this on the rise?

It seems that over recent years, payday loans have become a popular method of borrowing money for a short term. Until recently, the majority of people who borrowed on a payday loan were younger people, especially those who had families, often those who were claiming help in some form from the Government.

However, over the past 2 years, there has been a rise in another section of society who are turning to payday loans to help to make ends meet, and it is growing at a rather alarming rate.

Since 2015, the number of over 65s who have required financial help on top of their state pension has risen by 95.2%, which for anyone is a rather stark and startling statistic to see.

But what has caused this?

Pensioners are amongst the poorest per cent

With the news that this is happening, it is little surprise that age related charities have begun to take a look at what could be causing the rise of pensioners asking for pay day loans. It is thought that there are around 1.4 million pensioners in the UK who now fit into the poorest 10% bracket of people in Britain. In 2015, this figure was as much as 1 million people less.

Falling into this bracket has meant that these pensioners are now finding it hard to survive, even buying basics such as food and paying for gas and electric for their home.

Hasn’t the pension risen?

One consideration is that the amount that pensioners receive on a monthly basis has risen. Which is true. Over the past 2 years, the amount that a pensioner receives on a monthly basis has risen by £157. So, why are they still needing to top up their money?

Whilst they have found that their pension payments have increased, this increase is in no way proportionate to the amount that their living costs have risen, which is leading to the application of these top up loans.

It is thought that the average payday loan request by pensioners is £382. Which is £80 more than the average in 2015.

When you consider that so many of the pensioners in the UK are reliant entirely on their state pension, and this figure is only £7,000 per year, even with their increase. It becomes all the clearer why they may then struggle to pay for their accommodation, bills, food and of course any additional care that they may require too.

What can be done about it?

Needless to say, charities such as Age UK want to step in and work with the pensioners throughout the UK to improve their financial outlook. They state that with so many pensioners trying to manage a low income, ensuring that their bills are paid and that they have food to eat, there is work that needs to be done to help them.

One approach that is being promoted is that of ensuring that every pensioner understands where they can get financial help. In fact, there is as much as £3.8 billion that pensioners, even those who fall into the poverty bracket, are failing to claim. This includes Pension Credit and the Winter Fuel Payment too.

The reason for this is often because the person simply does not want to start to think about applying for help simply to live. They may have been able to manage their own money throughout their life and the thought that they need to apply for financial help at this late stage in their life could not be something that they want to own up to.

Payday loans are not the best idea for those who are struggling financially. Whilst they may give your income a small boost, the repayments could end up costing you so much that you need to borrow again, causing a spiral effect.

Whether you are a pensioner who is struggling to pay their bills and fill their fridge, or anyone else, for that matter. Why not seek advice on how better to manage your finances and ensure that the money that you do have on a monthly basis is going to last you through the month, rather than running out and leaving you with nothing?