In theory, payday loans exist to help consumers make ends meet when they need temporary help in a short amount of time. In practice, this type of fast and easy-to-get credit products are the only option – apart from loan sharks – for thousands of individuals and families, up and down the country, who need money “now”, and are unable to obtain a loan from the bank.
With strict terms and extremely high interest rates, payday loans can easily spiral out of control. For many borrowers, the payday loan is simultaneously the lifeline that keeps their heating on, and the chain that will keep them, prisoners, to an endless and growing debt nightmare.
Adding gambling to the equation
In 2017, 53% of UK payday loan customers borrowed money to pay for living expenses, including groceries and utility bills. When we add gambling addiction to this very unbalanced equation, the end result is nothing short of a personal catastrophe. And no, it cannot simply be chalked up to misspending or poor planning of personal finances. The real causes go much deeper.
Individuals living with gambling addiction don’t place a bet because they enjoy the game, or because they’re having a laugh with their mates at the pub. In fact, they usually feel quite isolated, and do it because they’re compelled to satisfy an uncontrollable urge – they just have to do it. In this process, anyone can get desperate enough to turn to payday loans as the solution to fund their sports bets, their online poker, their slot machines, or any other form of gambling.
Problem gamblers can easily find themselves in vicious cycles of borrowing to pay gambling tabs, forcing them to borrow more to cover newer debts. This is extremely dangerous, and can quickly lead to an unmanageable vicious cycle of debt and financial loss. The problem can be life-threatening, as troubling stories like that of Ryan Myers highlight. Mr Myers took his life in 2016, after falling into thousands of pounds of gambling debt and turning to payday loans as a last resort.
There’s no set character trait or signal precipitating this toxic situation. It can happen to anyone irrespective of their socioeconomic standing, from a low income part-time worker to affluent professionals like doctors or professional footballers.
“It’s not uncommon to have a player in a cycle of payday loans and gambling,” says Sporting Chance Clinic CEO Colin Bland, referencing patients at the athlete-focused recovery centre. 70% of Sporting Chance Clinic’s admissions are for gambling addiction, and many find themselves trapped between payday lenders and gambling before finally seeking help.
Out of gambling, out of debt
A person suffering from addiction turns to payday loans as a source of quick cash, confident he or she will win the money back. The plan rarely works out, and the individual is saddled with the added burden of debts that can multiply exponentially within a year due to the unfair interest rates.
Those at risk of slipping into this cycle need to seek help, as do those already inside the trap. While this is easier said than done, especially due to the level of isolation many players believe to be in, there are people, organisations and technology products out there that can help.
Protecting oneself from a dangerous payday loan trap is essential. But, the most important part of that process is confronting the addiction itself. Until victims overcome that obstacle, every day remains a new risk.