Newspaper article The Journal (Newcastle, England)

Costs Cap to Aid Payday Borrowers

Newspaper article The Journal (Newcastle, England)

Costs Cap to Aid Payday Borrowers

Article excerpt

PAYDAY loan customers will see the fees and interest they pay capped from now on amid moves to stop such debts spiralling out of control.

The new rules mean people using payday lenders and other short-term credit providers will generally see the cost of their borrowing fall and those who cannot afford to repay on time will never pay back more in charges than the sum they initially wanted to borrow.

For all high-cost short-term credit loans, interest and fees must not exceed 0.8 per cent per day of the amount borrowed.

The Financial Conduct Authority (FCA), which oversees the industry, said the move will lower costs for most borrowers and ensure that charges are proportionate to the size and duration of the loan.

Default fees for borrowers who fail to repay on time will be capped at PS15 under the measures, which are the latest in a string of clampdowns on the sector.

The new rules mean that, for example, if someone borrows PS100 for 30 days and pays back on time, they will not be charged more than PS24. …

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