BLAENAU Gwent residents are borrowing more than £100,000 every month in pay day loans from just one provider, the county' borough's MP claims.

Nick Smith MP for Blaenau Gwent has obtained figures from Wonga that show thousands of people in the borough have turned to emergency loans, with more signing up every day.

While Wonga would not release more a more detailed breakdown of the amount loaned, they confirmed a six-figure handout for March 2013 and a 6 per cent increase in customers on the year.

With the average customer paying 20.1 per cent in interest for a loan lasting less than three weeks, Mr Smith said he was worried the borough could be “bled dry” by a spiral of high-interest loans.

In the breakdown released by Wonga, 454 loans were issued in Blaenau Gwent in March 2012 – with 4,987 issued in all of 2012.

The average first-time loan was for £167, while returning customers who had built up a trust rating loaned £279 on average.

With the average loan lasting 18 days, it meant customers are paying back an extra £33.57 and £56.08 respectively.

Mr Smith said: “The fact that people in Blaenau Gwent could be borrowing more than a million a year just to make ends meet is deeply worrying – and that’s just from one provider."

In the last year the borough’s Citizens Advice Bureau dealt with 11 per cent more debt problems than the year before, and the most issues were for unsecured personal loan debts.

Mr Smith said it was important those in need considered the alternatives.

He said: “If you are struggling with debt, approaching services such as the CAB or Blaenau Gwent’s Christians Against Poverty is a better course of action than just borrowing more money and continuing the spiral."

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A Wonga spokesman said: "While we don't comment on individual constituencies , there are very good reasons why Wonga is now a popular mainstream consumer credit choice throughout the UK.

"As a responsible lender, we welcome Mr Smith's recognition of our loan decision-making technology, which turns down the majority of first-loan applications, and our early payment facility.

"We also share his concern about unscrupulous payday lenders and indeed at the Public Accounts Committee - of which he is a member -we supported calls for better regulation of the short-term lending sector."

 

LATEST figures released by Citizens Advice Bureau to Blaenau Gwent AM Alun Davies found that of the 2,095 enquiries it received in Blaenau Gwent during the last quarter of 2012/13, 1,219 of those were to ask for help regarding benefit and tax - up 5.8 percent on the same quarter of the previous year.

The second most post popular area of advice was debt, with 566 calls received.

Advice on Job Seekers Allowance (JSA) increased by 140 percent compared to the same quarter in the previous year Problems with consumer credit debts rose by 23 percent, back to the level of a year ago.

Issues with mortgage arrears rose by 31 percent and issues with other household bills rose by 29 percent.