Last year the Financial Conduct Authority in the UK announced that payday loan interest rates were to be capped at 0.8 per cent of the amount borrowed per day. However, Jersey is yet to follow suit.
A payday loan is a small amount of money that is borrowed at a high rate of interest on the agreement that it will be repaid when the borrower receives their next pay cheque.
Malcolm Ferey, the chief executive of Jersey Citizen Advice, said that in the past small numbers of Islanders had approached the service with concerns about payday loans. However he said none had done so recently.
‘Jersey has not seen the explosion in people getting sucked into further debt by using the questionable business model of payday lenders,’ he said. ‘We still welcomed the UK government’s action to curb the activities of these firms, who in some cases were little more than loan sharks.’
He said that in the past the JCA had seen a small number of Islanders who had applied for payday loans online and had discovered the difficulties in repaying the money due to high interest rates. However, he said the numbers had tailed off recently.
‘Our mantra being that if you are considering using a payday loan it is usually a good indication that what you really need is a thorough overhaul of your personal finances to find long-term solutions, not short-term fixes.’
Islanders who need advice can call 0800 735 0249, email advice@cab.org.je or book an appointment with the JCA.
