New data released by the Consumer Action Law Centre and the Stop the Debt Trap Alliance has shown that the number of households currently holding a pay day loan is now fast approaching the one million mark.
Pay day loans are almost exclusively used by people on low or very low incomes to try to keep their heads above water. However, they often fall into a debt cycle due to the outrageous fees and interest rates of almost 900 per cent.
This report provides never before seen data demonstrating the extent of harm caused by the payday lending industry and the impact on the people who are most susceptible.
Key highlights of the report include:
- 30,000 pay day loans are being taken out each week;
- Between April 2016 and July 2019, more than 4.7 million payday loans were written totalling approximately $3.09 billion; and
- The number of women using payday loans has risen from 177,000 in 2016 to 287,000 in 2019, with nearly half being single mothers.
One of the most shocking figures to come out of this report shows that over a five-year period, around 15 per cent of payday loan borrowers fall into a debt spiral. On that basis, an additionally estimated 324,000 Australian households have been allowed to enter a debt path that may result in an event such as bankruptcy.
But despite multiple promises by Government Ministers and Prime Ministers, the Assistant Treasurer Michael Sukkar continues to ignore the growing crisis, leaving families to pay the price.
The report released by the Consumer Law Action Centre was compiled by more than 20 members of the Stop the Debt Trap Alliance – a national coalition of consumer advocacy organisations who see the harm caused by payday loans every day through their advice and casework.
These findings reinforce the urgent need for the Morrison Government to end their inaction on this issue and put in place stronger protections for vulnerable people who use payday loans.
Labor again call on the government to bring forward legislation to provide protection to families and vulnerable Australians from loan sharks.
THURSDAY, 14 NOVEMBER 2019