Newcastle University researchers say a ban on access to online credit between 11pm and 7am could help protect consumers.

Rates of people owing money peak when payday loans are taken out during these hours, the study Digital Credit, Mobile Devices and Indebtedness reveals.

The research, funded by the Economic and Social Research Council, investigated how access to digital forms of credit is changing people’s use of credit and their understanding and experiences of indebtedness.

 The key findings of the report are that:

• The speed and ease of access to online borrowing encourages people to see credit as money rather than debt, which minimises the consequences and implications of using high-cost, short-term credit.
• Digital credit interfaces are designed to minimise consumer deliberation by smoothing interaction and speeding up the lending process, which trivialises consumer decision-making around borrowing.
• Digital access to credit at any time, and from anywhere, is problematic, because it fails to address the root cause of borrowing by simply deferring consumer need for or worries about money to ‘another time and place’.
• The speed and ease of access to digital credit produces and reinforces financially harmful behaviours, such as impulsive borrowing and spending.
• Digital access to credit increases instances of borrowing, because it gives consumers a heightened sense of anonymity, privacy and agency around money matters.
• The use of personal digital devices to access and manage credit intensifies feelings of anxiety, pressure and guilt for consumers who feel constantly connected to their credit provider.

The report also urges regulators and policymakers to prohibit loan companies from pursuing existing customers by text and email to take out more credit.

Dr James Ash, lead researcher, said that urgent reforms are needed to protect consumers from financial and psychological risks: "Twenty-four-hour access to credit from any device is leading to unsustainable borrowing. This can contribute to long-term personal and financial hardship, and mental health problems."

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Newcastle University: Credit 'Curfews' Answer to UK Debt Crisis

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