Credit cardsI always wondered why Wonga used three puppets depicting old people in their adverts. Surely payday loans are the preserve of young whipper-snappers wanting to pay for the newest gadget or their next night out, right? Wrong.

It seems that Britain's 'favourite' payday lender has been one step ahead of the curve when it comes to its advertising campaign. By depicting pensioners in its adverts, it isn't only making an annoyingly memorable advert it is (maybe) inadvertently showing us a burgeoning area of its client base.

In a report from the International Longevity Centre (ILC) and Age UK about debt and older people it reveals that 1.1 million pensioner in debt are experiencing 'problem debt'. Problem debt is of £10,000 or more of unsecured debt, on an excessive rate compared to the person's income and becomes a problem if the borrower is experiencing some or severe financial difficulties.

Although older people are more likely to have a negative attitude to debt and the number of over-50s using debt dropped 10% between 2002 and 2010 the amount those still borrowing owe has risen substantially from £1,500 to £2,500 in the same period.

A total of 10% of older people with unsecured debts – around 400,000 people – are paying over £85 a week to service the debt.

Despite the idea that pensioners these days are wealthy and older people are living within their means, it is not unusual for retirees to have mortgage and credit card debt. There is nothing wrong with that if they can afford to service it – and if they want to take out a payday loan to cover an expense that it fine too.

However, there has to be a realistic attitude to debt in old age. Pensioners are on a fixed income and often have no way of increasing it to cover an emergency like a leaking roof. For someone who cannot easily find money to pay back a debt quickly, payday loans are probably not the best answer.

Age UK reports it has seen an increasing number of pensioners with debt problems and there is a real worry that this trend will continue if we don't get our pension savings in order. If we don't save enough for retirement we'll be forced into debt in old age and worst of all be forced to pay the extortionate rates of payday lenders.

Retirement should be about achieving an element of financial freedom not worrying about a debt collector banging on your door.


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