Which? calling for credit crackdown

Consumer campaigners are calling for a crackdown to clean up the "irresponsible" credit industry after finding that a quarter of people who take out expensive payday loans are using them to plug other debts.

Which? said that "desperate" borrowers who find themselves locked out of mainstream credit are drowning in a vicious cycle of high-cost loans as they try to meet their daily living costs.%VIRTUAL-SkimlinksPromo%
It found that 24% of people who said they take out payday loans were using the cash to try and pay down other debts they had taken out.

The consumer group said that half of people who used a form of high-cost credit such as a payday loan or unauthorised overdraft said that they had been rejected for credit within the past year.

Of the credit users Which? surveyed, the vast majority (78%) had credit cards while a third had authorised overdrafts and one in six had a personal loan. One in 16 credit users used payday loans and one in 20 had dipped into an unauthorised overdraft.

Which? said that some households are becoming increasingly reliant on loans just to get by and more than half (57%) of people who had credit-card debt were using their card to cover essentials such as rent and household bills.

The consumer body called on the Government to make sure that new financial watchdog the Financial Conduct Authority (FCA), which will regulate credit from next year, takes "early and tough action".

Which? said the FCA should ban lenders from imposing excessive default fees and charges, toughen up on rules to make sure proper affordability checks are carried out and end unsolicited increases to people's credit limits by firms.

The FCA should also limit the number of times that high-cost loans can be rolled over, force firms to make fees and charges more transparent and step in quickly when borrowers are struggling, Which? said.

Which? executive director Richard Lloyd said: "For an increasing number of people, using credit to pay for essentials has become the norm. This has led to people being forced into a vicious cycle, taking out further, expensive credit to pay off existing debts."

Tax tricks to improve your wealth
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Which? calling for credit crackdown

If you wear a uniform of any kind to work and have to wash, repair or replace it yourself, you may be able to reclaim tax paid over the last four years. For some people, this could mean a windfall worth hundreds of pounds

The interest you receive on savings accounts (with the exception of cash Isas) is automatically taxed at a rate of 20%.

Higher-rate taxpayers therefore tend to owe money on the interest they are paid throughout the year. If, however, you are on a low income or not earning at all, you should be able to claim all or some of the tax deducted back

You can apply for a refund of vehicle tax if you are the current registered keeper or were the last registered keeper of your vehicle that no longer needs a tax disc

If you pay tax on a company, personal or State Pension through PAYE (the system employers use to deduct tax from your wages), you may well end up overpaying

There is a limit to the amount you need to pay in NI, whether or not you work for an employer.

Instances in which you may find that you have overpaid include if you work two or more jobs and earn more than £817 a week and if you move from self-employment to employment, but continue to pay Class 2 National Insurance contributions

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