Loan shark warning as Christmas borrowing mounts

Around a quarter of people are expected to borrow to help pay for Christmas

People already in debt could fall prey to loan sharks at Christmas, a team dedicated to tackling illegal moneylending says.

Illegal moneylending is rife at this time of year, but Stop Loan Sharks Wales say the high cost of living means many borrowers are already in trouble.

About a quarter of people are expected to borrow to help pay for celebrations.

While most will use credit cards or other official methods, some will risk taking cash from loan sharks.

"Normally, we would see an increase of referrals in the new year, when everyone that has borrowed before Christmas finds they're struggling to make the repayments," said Sarah Smith, team manager for Stop Loan Sharks Wales.

But she said people were already facing threats or intimidation after borrowing earlier in the year to keep up with the increased cost of living, and the situation is much more critical than ever.

The Money and Pensions Service found that about a quarter of people were planning to borrow money to pay for Christmas.

Sarah Smith is urging people to look at other options before turning to illegal sources of borrowing money

Of those who are borrowing money, 52% said they were likely to use credit cards, 35% would use buy now, pay later schemes and 24% would use their overdraft.

Ms Smith urged people to look at other options before turning to illegal sources of borrowing money.

"Once someone is borrowing off a loan shark, they will then find that the repayments are much higher than they thought," she said.

Ms Smith said illegal moneylending doesn't come with any paperwork or agreements that set out repayment, and "when they struggle to make the repayments, they'll have to borrow more".

Borrowers "become stuck in a cycle where they can't ever pay off what they originally borrowed", she said.

Shoppers in Cardiff said it was a struggle to stick to a budget at Christmas.

Michelle Roberts said she had set herself a spending limit

Michelle Thomas, a mother of two from Carmarthen, had spent £150 quite soon after starting her Christmas shopping in the Welsh capital.

"That's not my budget, that's just the start of it!"

She said she had set herself a spending limit, "but sometimes if I see something I go for it. You only live once."

Ms Thomas said other costs were also going up. The bill for lunch during her shopping trip had "gone up, mega!"

The 39-year-old said Christmas was still affordable for her, but she understood why people worry about getting into debt at this time of year.

"I think that's on a lot of people's minds," she said. "I've got kids, a 10 and a seven-year-old. So I think it's just one month, and I have got a steady job in the NHS."

Chloe John says she will be "working a lot" to pay for Christmas

Another shopper, Chloe John from Pembrokeshire, admitted she had spent "too much" on her trip to the shops, but said it was "never fair to put a budget on things, every present has a meaning and it doesn't matter how much it is."

The 23-year-old added that she would be "working a lot" to pay for Christmas, but joked she would "go and cry about it" too.

Student Lewis Smith, who is 18, said he had set a budget of £50 per person.

"I try to cap it at 50, but sometimes I go over," he said. Pay later schemes were not appealing, he said. "You worry about getting into debt if you use Klarna, so spend what you've got."

His friend Leah Rendall said she "would probably budget" for Christmas.

"I would just try and spend the same amount on everyone," she said.

• DOGS ON DEATH ROW: Will the new ban on XL bully dogs work?

• THE CRASH DETECTIVES: Every serious incident on the road requires forensic examination