Payday loans are the most harmful type of debt after loan sharks

Demos has produced a new report about Uk Debt some of the findings of the report are in this article, which can also be accessed here a new report from Demos  

Creating a debt “harm index”

Total UK household debt is now more than £1.4 trillion and is higher than the previous record set in September 2008.

But that big headline number doesn’t tell a very useful story about how debt actually affects individuals.

For one thing, more than £1.2 trillion of household debt is from mortgages.

Demos has created what they call a “harm index” for different types of debt.

They commissioned a survey of 2,035 people and asked how problematic different types of debt were based on ten different attributes.

The survey found that the most “harmful” loans were illegal loans, followed by payday loans, council tax arrears and rent arrears.

The least harmful were student loans, store credit cards, mortgages and friends and family.

Here’s a look at the ranking by the index:

If you can afford to go into debt you can afford less harmful forms of of debt. Poorer people don’t have as many options. People who fall into arrears with payments generally have no choice, whereas people who have credit cards or take out a mortgage usually have more control of their situation.