It has been claimed that the end of the year could see an increase in the number of payday loans being taken out, as many desperate consumers who have run short of cash head to payday lenders to try and get an advance on their next pay packet. There are a number of factors that could contribute towards this increase, which could continue into January.

Many people will be spending a huge amount of money on things such as Christmas gifts, going out, clothes, food, and travel over the festive season, and this means that they will run out of cash far earlier than they normally would, leaving them financially high and dry unless they have some savings put aside to subsidize their spending.

Another factor that could increase the chances of payday loans being taken out is that many people get paid a little earlier than usual in December, but at the same time as usual in January. This means that many may have to make their salary last five or six weeks, which means that they are likely to run out earlier than usual and find themselves looking for a financial lifeline.

Whilst payday loans can prove useful to people in such circumstances, many are worried that they can lead to spiralling debt, and can also result in huge fees in terms of interest, especially if the borrower gets into the habit of rolling the loan over from one month to the next.

One official said: “Consumers should think carefully before heading off to take a payday loan, and should only do this if completely necessary. In the first instance just try and make your finances stretch, and make some cutbacks on spending. However, if you cannot do without a loan, payday lenders are a far, far better option than risking some unscrupulous and unregulated loan shark.”