Research shows impact of payday loans on mental health

However, it also suggests rules designed to protect borrowers from exorbitant interest rates could leave people struggling to afford basics with nowhere to turn.

The inflated annualised interest rates, or APR, for borrowers hindered by poor credit can hit 1,509 per cent through the payday loans.

The study found that people in debt were four times more likely to have depressive episodes, panic attacks or anxiety disorders.

Chris Harkins, public health research specialist at GCPH and author of the new report, told The Herald: “I think there was a common perception that the payday lending industry was fixed to a degree.

“But the feedback we were getting from a lot of our third sector, partner agencies we work with was that this issue was very much still alive. They were still encountering families and individuals who were getting into spiralling debt still with pay day lending, but I guess most importantly of all the demand for short term easily accessible credit was not reducing to a huge degree.”

Mr Harkins added: “There is no doubt that spiralling unmanageable debt is absolutely corrosive to mental health.”