Interest on payday loans could be capped at 0.8% a day under new rules from the financial regulator
The Financial Conduct Authority (FCA) said it plans to limit payday loan interest to £24 for £100 loan over 30 days
Payday lenders could be limited in the amount of interest they charge, under plans announced by the regulator, the Financial Conduct Authority. It wants to cap the interest at 0.8% a day, which works out at £24 for every £100 borrowed over a month. What could the interest rate cap mean and when will it take effect?
Payday loans promise easy access to cash for short periods. But they can charge £80 for a £300 loan for a month.
If you need money quickly, a payday lender may seem like a good option. But be aware that they charge interest of up to £30 for every £100 you borrow for a month. And if you can't pay back your loan, there could be other charges as well.
Paying off a loan early - check the paperwork as you may be able to make extra payments
Treat: if you've taken out a loan recently you can overpay. Trick: if your loan is older there may be penalties
If you’ve taken out a loan since February 1st 2011 you can make overpayments of up to £8,000 a year without having to pay a big penalty. That means if you paid a little extra every month, you could clear the loan earlier and save on interest payments. However, if you have an older loan, you may be charged a penalty if you make any extra payments. How do the rules work?