The payday loan industry has been heavily criticised in recent years, and has been linked to further financial difficulties, stress and anxiety and even health problems. Now, newly released research has shown that they are the “most unhealthy” financial product on the market. The investigation was carried out by The Royal Society for Public Health (RSPH) and the End High Cost Credit Alliance, who were looking at the impact different types of debts had on people’s lives and wellbeing.
In the report, it was revealed that payday loans had the biggest overall impact on the mental wellbeing of those borrowing compared with other credit products on the market. Participants were asked a number of questions about their financial situation, like whether they were able to keep up repayments and if they were in further debt. They were also asked how the loans affected their mental health, including whether they felt depressed, anxious, guilty, ashamed or angry.
They were then given a score out of five – with a lower score indicating that it had a greater negative impact on their wellbeing. Payday loans achieved the lowest score at 1.88. This was followed by unauthorised overdrafts and doorstep loans. The report also found that three in five of those who owed money to payday loan companies used alcohol to cope with their mental health problems, which were caused by the debt.
Michael Sheen, who was involved in the research said “As a society we believe in justice and compassion and yet problem debt is pulling more and more people into poverty, taking a hold on their physical and mental health. That is not acceptable. This report shows just how damaging it is when we have an economy, culture and infrastructure which enables finance providers to prioritise profit over our health and wellbeing.”
He added: “We share a moral responsibility to help protect vulnerable customers from the harm high cost credit causes. The evidence on the impact on our health and wellbeing is now overwhelming. We have the evidence. Now we need action.”