Birmingham is the payday loan capital of the UK with an eye-watering £37.1 million of borrowing taken out last year according to previously unpublished data held by the FCA. Contributor Peter Briffett, CEO and Co-Founder – Wagestream.

Residents of the West Midlands city also took out the most payday loans by volume — a massive 146,176 throughout the year — as their personal finances came under pressure. 

When ranked by total amount loaned in 2018, Birmingham was followed by Manchester (£28.6m), and Sheffield (£23.8m).

Wagestream analysed the amount of payday lending in each postcode area following a Freedom of Information request to the Financial Conduct Authority (FCA). The data reveals Britain’s ongoing dependency on payday loans, which can charge interest rates of up to 1,500 percent APR compared with 22.8 percent for a typical credit card². 

Wagestream is an app that gives employees early access to their earned pay with no loan or interest charges. The company campaigns against payday poverty and punitive lending in whatever form.

When weighted for population density, Croydon came top with £29.15 borrowed for every man, woman and child last year totalling £11.8m in 12 months. The London borough was followed by Romford (£29.04 per capita) and Dartford (£26.26 per capita).

Due to the higher cost of living, locations in and around London dominate those areas seeing the highest average loan amounts.

The largest loans on average were secured in Ilford, East London, where the mean payday loan was £301.73 compared with second place Harrow on £285.29. 

A surprise entry is the Shetland capital of Lerwick in third place, with an average payday loan amount of £281.56. An estimated 40 percent of Shetland households live in fuel poverty while the housing market has boomed, with average prices on Shetland rising 127 percent between January 2009 and their peak in May last year³. 

Peter Briffett, CEO and Co-Founder, Wagestream, commented: “Payday loans are exploitative, ultra-high cost and plain wrong, so it’s frankly mind-boggling that these lenders are still able to prey on UK workers. 

“However, in the majority of cases, financial stress caused by the monthly pay cycle means people turn to payday lenders not out of choice but necessity, so it’s vital we replace this industry with something better. 

“Employees today still find themselves in the crazy position where they are effectively giving their employer an interest free loan every month as they wait for their monthly payday. 

“It’s their money but they don’t make that association despite the fact this is where the payday poverty cycle starts. 

“Early access to earned wages is set to be the biggest revolution in pay over the next decade and will prevent legions of Brits from entering a vicious cycle of punitive borrowing, something which is exacerbated by this outdated notion of being paid once a month.”