Abstract
This article examines the dynamics of credit and debt in low income households, drawing on an action research project with 24 households in the Teesside area of North East England. Despite crippling interest rates, high-cost credit sources (for example, doorstep lending, catalogue, rent-to-own and payday loan companies) are increasingly used by households that are excluded from mainstream financial services. The article discusses the range of credit sources used, reasons for reliance on high-cost credit and the exploitative practices of loan companies. It explores possible actions at household level through financial mentoring; the potential for developing alternative low-cost sources of credit; and campaigns for regulation of loan companies.
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