Young and in debt? You’re not alone…

Teenagers and young people who are finding it hard to cover costs are more likely to resort to expensive payday loans than other forms of borrowing.

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Research from Citizens Advice found that more than six out of 10 (62%) of young people using high-interest credit are turning to payday loans – high cost, short-term loans aimed at people who are struggling to make ends meet.

According to the charity, people aged 17-24 make up more than 15% of debt cases where the debt has been caused by loans charging high rates of interest.

Big concern

Gillian Guy, chief executive at Citizens Advice, said: “It is a big concern that so many young adults are turning to some of the most expensive types of loan to get by. Taking out a payday loan in your late teens or early twenties can have significant and damaging consequences for later life.

“Often, high-interest loans end up spiralling out of control and many people in debt end up feeling they have nowhere else to turn other than a vicious circle of more borrowing.”

The charity found that 10% of its clients in serious debt are aged between 17 and 24, of whom just 8% of those are in debt because of mainstream credit, such as an overdraft, bank loan or credit card.

False pretences

No loan company, payday or otherwise, offers loans to people under the age of 18. The reason for this is that anyone under this age can't be held to any contract they make, so the debt cannot be legally enforced.

However, there have been cases of young people who have lied about their age and taken out payday loans online.

Alternatives to payday loans

A payday loan should only ever be a last resort. Interest rates are extremely high and you can run into serious financial problems unless you repay what you owe on time.

If you do need to borrow money, you should opt for a less expensive standard personal loan or credit card.

Age limits

Most loan providers allow you to borrow from the age of 18, provided you haven’t had problems with debts before and you’re a UK resident.

To apply for a personal loan with either Sainsbury’s or Tesco you must be 18 or over. You’ll also be eligible to apply for a loan with Barclays, HSBC, Halifax, Clydesdale Bank or Nationwide Building Society if you are at least 18.

A number of loan providers impose higher age limits and minimum income requirements.

If you want to take out a personal loan with Santander, for example, you must be aged 21 or over and have a regular annual income of at least £5,000. To apply for a Post Office personal loan you must be over 21 and have a regular income above £8,000 a year.

Credit card alternatives

You must be aged at least 18 to apply for a credit card, and again these will usually be a much cheaper alternative than a payday loan. You cannot take out a credit card if you are younger than 18.

Remember to check the annual percentage rate (APR) charged by any card you are considering before applying.

Wherever possible, try to go for a card which offers a lengthy 0% introductory period and repay what you owe during this period so you can avoid paying any interest at all.

Earning requirements

Many cards require you to be earning a minimum income before you apply. For example, if you want to apply for a credit card with Cooperative Bank, you must be aged 18 or older and have an annual income of £10,000 or more.

If you apply for a card with Tesco, then you must have an annual income of £5,000 or more and be aged over 18. Halifax says you must have a regular income to apply for one of its credit cards, but doesn’t state a minimum.

To apply for a Lloyds Bank credit card, you must be 18, a UK resident and free of any county court judgements, but you do not have to be earning a set amount each year.

Debt management & advice

You should only consider taking out a credit card, personal loan or any other form of borrowing if you are certain you will be able to repay what you owe. See where you can reduce your outgoings and make savings before you apply.

If you’ve already taken out a payday loan or other form of high-cost credit and are struggling to pay it back, seek professional help as soon as possible.

To find your local Citizens Advice bureau in England and Wales, visit You can also get advice online at You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.

Alternatively, call National Debtline on 0808 808 4000. 

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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