Many people are using payday loans to supplement income

There are a lot of people getting involved in payday loans at the moment, with some commentators suggesting that this as a result of the availability of credit from other avenues.

Stuart Carmichael, director of the Debt Support Trust, explained that payday loans often appear to be the logical solution as it gives them the money they need to tide them over if they do not have the funds to make ends meet or have been hit by an unexpected bill.

"For example, your banks are stopping giving overdrafts, they're taking overdrafts back and people use that form of credit to supplement their living. When that gets taken away from them, they have to seek other means of support and if they've not got friends and family that can lend them the money, their next stop is a payday loan," he said.

Now with a loan of £100, the repay amount is close to £130, however, when people start borrowing more or on a longer term it can be more difficult to pay back, meaning that they then take out additional payday loans to cover this, creating a spiral of debt.

"It's becoming a lifestyle product for many people. They're actually using their payday loans to supplement their living - it's not just a one-off purchase," Mr Carmichael suggested.

But when people get into this situation, it can be difficult to make a change as households need to get the money from somewhere.

However, many people are using free apps on their tablets and smartphones to help them manage their finances by showing them all of their incomings and outgoings, potentially highlighting areas where savings can be made.

A number of these apps for tablets show clearly in graph and chart format where people are spending their money and provide them with the tools and knowledge to cut back on luxuries.

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2011-11-17 13:24:59 © Moneyextra.com