I pulled myself out of poverty by steering clear of payday loans
WONGA’S collapse has been precipitated by an increasing number of people defaulting on their loans and becoming unable to pay back money. This comes as no surprise, with consumer credit debt at an all-time high and outstripping wage growth. On top of this, interest rates are rising, so those with smaller spending budgets are feeling the squeeze and are increasingly likely to miss payments. There is no doubt that high-cost, short-term loans target the most vulnerable in society. Individuals already in an insecure financial position turn to them for a way out and find themselves trapped in a cycle of mounting debt. I saw this first-hand when one of my friends took out a payday loan, believing it would provide relief from a situation in which he could find no other financial help, only to end up even worse off. He had to sell his car and is still paying back the loan. I grew up in a family experiencing financial difficulty. At one point, I shared a single bed with my brother and we lived in one room with our father. I was determined to change my circumstances. However, having witnessed the experiences of my friend, I was reinforced in my resolution to steer clear of payday loans. My success came from starting out on a trading course and teaching myself to use algorithms to trade on the forex (foreign exchange) markets. I found this was something I enjoyed and by the time I was 18, I had turned my student bursary of £2,000 into £170,000 in a little over 12 months. I went on to establish a governmentaccredited training programme which now has an HQ in Watford and an office in Madrid. I believe the Government is right to clamp down on payday lenders and should look to create its own debt consolidation scheme to help people out of dangerous financial situations that leave them vulnerable. Meanwhile, alternatives for those in financial need must be made clear and communicated to the public. For those considering a short-term payday loan, credit cards that are interest-free for the first 12 months are a good option, while those who already owe money should look towards debt consolidation companies to get a lower rate of repayment. The availability of schemes offering a buy now, pay later option perpetuates an unsafe way of living that encourages people to overlook the value of financial security. With a growing number of people unable to make ends meet, we need to address the root causes of economic insecurity and ensure people are living within their means.
SAMUEL LEACH, Watford, Herts. IT AppEArS that if you owe Wonga money, you must carry on paying. While if they owe you money, you might get some if there’s enough left in the kitty now they’re broke.
JOHN COLLINS, Chelmsford, Essex.