Under-18s 'accessing payday loans'
Young people are risking a lifetime of debt by borrowing money from payday loans companies, according to new research.
Action for Childrensaid 12 to 18-year-olds may not have the financial education to understand the risks of store cards and high street loans.
"High interest products and companies are now far too easy for young people to access," said Sir Tony Hawkhead, chief executive of Action for Children.
The charity’s report, Paying the Price, has uncovered a "worrying" level of borrowing among young people.
Out of the 1,058 12 to 18-year-olds surveyed, 41% of those who said they have borrowed have done so with pay day loan providers.
High street lenders including store cards are also becoming a port of call, with over a third of the young people (38%) saying they use them as an easy and quick way to access money.
Action for Children’s frontline services see young people resorting to borrowing money to replace household goods, set up their first home or keep up with their friends.
And in the run up to Christmas the charity is worried as it sees the festive season as one of the biggest reasons young people resort to borrowing money.
"Some young people are less likely to have the financial skills they need, they may have to live on a low income or are not in education," Hawkhead said.
"They are also not able to learn about money at home or at school where other young people do.
"Add in baffling financial jargon and a lack of knowledge will dramatically create a vicious circle of debt, increasing the risk of mental health problems and unemployment.
“We cannot afford to let children pay this price because of a simple lack of financial education.
"They must be equipped with the necessary skills to make informed money decisions to give them a chance of a happy future.”
Action for Children said 55% of children have not received any financial education or do not know if they have done so.
Of the young people who had received financial education, 87% learnt from parents or carers and only 27% learnt about money at school.
Action for Children is calling for targeted support to young people who are less likely to be financially capable and who at greater risk of falling into debt , by going beyond home and school and creating opportunities to learn about money in other services like youth services and children’s centres and with adults who young people can depend on.
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