Payday loan debt can quickly spiral, they are short term, unsecured loans designed to cover your expenses until your next payday.
Payday loans often have extremely high interest rates and if you don’t pay the loan back on the date it’s due the lender will add extra charges to your account.
When you apply for a payday loan, the lender will normally take your debit card details so they can take the full loan payment out of your account on the due date. When you give the lender your card details you’re authorising them to take regular, or continuous, payments.
If there isn’t enough money in your account to repay the loan then the lender can try to take the payment again, and they could do this several times. If you don’t have the money, your bank or building society will probably charge you. You’ll then owe the payday loan debt and the bank charges.
Short term payday loans
Payday loans are designed to be a short term fix to a problem. But they can cause more problems if you don’t have enough money to pay the loan back the next month.
Once you’ve repaid the loan, you might not have enough money to last until your next pay day. When this happens, it can seem like a good idea to take out another payday loan. You can soon become reliant on them and your situation will become difficult to deal with.