In recent years there has been an enormous growth in payday loans and short-term financial solutions aimed at individuals who need to tide themselves over during periods of financial pressure.

The fall out from the global economic meltdown has left many families facing a tricky time balancing the books. Payday loans are a tempting quick fix as usually there is very little in the way of paperwork required and borrowers can get their cash within a few hours. Some providers even promote this type of lending as 'loans with no credit check'.

If you find yourself in a position where you need to borrow money using a payday loan, sensible advice is to borrow the minimum you need and pay it back in full as soon as you can, preferably within a month to minimise the high interest charges.

	Borrow	Charging Summary	Typical APR (variable)
Now! PayDay	£100 - £750	£14.75 per £50 borrowed Amount Borrowed Interest Charge Total Amount Repaid £100 £ £ £200 £ £ £300 £ £ £400 £ £ £500 £ £ £600 £ £ £700 £ £	1734%
Purple Payday	£100 - £750	£25 for every £100 you borrow Amount Borrowed Interest Charge Total Amount Repaid £100 £ £ £200 £ £ £300 £ £ £400 £ £ £500 £ £ £600 £ £ £700 £ £	1737%
Payday UK	£80 - £750	£25 per £100 borrowed Amount Borrowed Interest Charge Total Amount Repaid £100 £ £ £200 £ £ £300 £ £ £400 £ £ £500 £ £ £600 £ £ £700 £ £	1737%
Payday Bank	£80 - £750	£20 for each £80 borrowed Amount Borrowed Interest Charge Total Amount Repaid £100 £ £ £200 £ £ £300 £ £ £400 £ £ £500 £ £ £600 £ £ £700 £ £	1737%
Payday Express	£80 - £800	£20 for every £80 borrowed Amount Borrowed Interest Charge Total Amount Repaid £100 £ £ £200 £ £ £300 £ £ £400 £ £ £500 £ £ £600 £ £ £700 £ £	1737.2%

Payday loan lenders believe they are catering to a market which is potentially millions of households who are excluded from mainstream financial products, possibly because of their income or lack of credit history. The APR on a payday loan is typically in excess of 1000% and the pay day loan industry has faced a torrent of criticism from some quarters for charging what is regarded as exorbitant rates of interest and preying on vulnerable families.

In April 2008, the Archbishop of Canterbury, Rowan Williams, called for a cap on such rates during an interview with Radio 4 'Today' programme. He went on to chair a debate at the House of Lords where he called for an 'urgent review' into the payday lending phenomenon. Debt On Our Doorstep, a campaign group committed to ending 'extortionate and irresponsible lending' tabled a motion in parliament calling for an investigation into payday loans. Damon Gibbons, chair of Debt On Our Doorstep commented "We would suggest that not bothering to run any credit checks or verify income constitutes irresponsible lending and would like the Office of Fair Trading to look at whether these companies should have their credit licences revoked".

In defence of the industry, Geoff Holland, the chief executive of the British Cheque Cashers Association, of which payday loan providers are members, says it's 'extremely misleading' to talk about APRs in relation to the loans as the money is lent over such a short period of time. He said most of his group's members lent people £88 for 28 days and charged £12 for this service. He stressed that the majority of people pay off their loans during or around the repayment period and the loans do not spiral into huge debts.

Following a year long investigation, the Office of Fair Trading published its findings in June 2010 and concluded that imposing a cap on interest rates and charges which could be levied by payday loan lenders would further reduce competition in the sector. It was felt these lending markets worked "reasonably well". Ray Watson from the Office of Fair Trading remarked, 'people who use high-cost credit have limited options and find it difficult to exercise what choice they have to obtain the best deal.' However, the OFT did suggest 'wealth warning' statements should be introduced on advertisements for high-cost credit.

Currently all payday loan companies are regulated by the City watchdog, the Financial Services Authority.