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Case study: how the poor pay more
One Provident Financial customer told the children's charity Barnardo's of his horror at the interest rate he was paying
Our recent report, Below the Breadline, indicated that the disposable income of many families is far lower than the nominal value of their earnings or benefit payments, due to repayments on high-interest loans.
An example from our research is Ralph, 36, a single parent with five girls aged between seven and 17. He is very anxious that his girls' futures should not be blighted by their current circumstances. He has cared for them on his own since his wife died in late 2005 and is clearly devoted to them, their welfare being his greatest priority. Ralph's weekly income is £290 after housing costs, £112.38 below the poverty line.
Ralph does not like to borrow money. He prefers to live within his means and only spends what he has budgeted for. Previously he has had a loan from the Provident and was horrified at the high level of interest he paid: 'It was scary and it kept me awake at night'.
When large items such as fridges, ovens, washing machines need to be replaced they compromise his careful budgeting. With such a low income he's unable to get interest-free credit from shops. There are ways that poor families can buy these large items in instalments, but at a substantial premium. Barnardo's found an example of a washing machine that would cost £1,137.24 over three years. The same model can be bought elsewhere for less than £350.
One Provident Financial customer told the children's charity Barnardo's of his horror at the interest rate he was paying
- guardian.co.uk, Tuesday 28 July 2009 17.04 BST
Our recent report, Below the Breadline, indicated that the disposable income of many families is far lower than the nominal value of their earnings or benefit payments, due to repayments on high-interest loans.
An example from our research is Ralph, 36, a single parent with five girls aged between seven and 17. He is very anxious that his girls' futures should not be blighted by their current circumstances. He has cared for them on his own since his wife died in late 2005 and is clearly devoted to them, their welfare being his greatest priority. Ralph's weekly income is £290 after housing costs, £112.38 below the poverty line.
Ralph does not like to borrow money. He prefers to live within his means and only spends what he has budgeted for. Previously he has had a loan from the Provident and was horrified at the high level of interest he paid: 'It was scary and it kept me awake at night'.
When large items such as fridges, ovens, washing machines need to be replaced they compromise his careful budgeting. With such a low income he's unable to get interest-free credit from shops. There are ways that poor families can buy these large items in instalments, but at a substantial premium. Barnardo's found an example of a washing machine that would cost £1,137.24 over three years. The same model can be bought elsewhere for less than £350.
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