Research: Short-term personal loans rising following recession

New research has shown the number of people taking out short-term personal loans has increased over recent years.

New research has found that the number of people taking out short-term personal loans has increased markedly over the last few years.

According to a study released on August 14th by Consumer Focus - entitled Keeping the Plates Spinning - there has been a rise of around 400 per cent in the number of consumers taking out payday loans, which may be used as an alternative to gaining funds through a credit card or a savings account.

The study showed that some £1.2 billion has been borrowed via these products, which can be attached to annual percentage rates of between 1,000 and 2,000 per cent due to their short-term nature.

Marie Burton, financial services specialist at the organisation, said: "Demand for short-term borrowing has significantly increased despite the eye-watering interest rates charged by some payday lenders."

Meanwhile, Louise Holmes of Moneyfacts said last week that credit card holders have a right to feel aggrieved at the increased lending charges now attached to many of these accounts.

By Emma North