I won’t cheer if Wonga fails. I was grateful he was there for me | James ball

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The payday lender Wonga would stand on the on the verge of collapse, because the company – once fixed for a stock market valuation over $ 1 billion – struggled to raise funds to pay claims for excessive fees charged to customers.

Wonga is hardly a company many would mourn for: its advertised APRs (the official way to calculate loan interest) ranged from 1,509% to over 5,000%, at a time when the Bank’s base rate. England was only 0.5%. The company charged distressed customers large fees who missed refunds and advertised aggressively. The snow stopped taking new loan applications.

For many, the company has made a perfect nasty pin-up, an example of the kind who was willing to exploit those struggling in an era of austerity, wage cuts and benefits in real terms, and people who were just looking to make it through the month.

This view is not necessarily wrong – except to ignore how most alternatives to Wonga. The reality is that there are hardly any other options on the table, and all of them are worse. I know this because I was a Wonga customer.

My financial situation was probably better than that of many people who needed this service – on the one hand, I had no children to feed – but it was pretty tight: I was making £ 20,000 a year, each month I was paying £ 500 in rent, plus bills. , plus a £ 210 graduate loan, plus £ 220 on a rail card.

That left around £ 80 a month for everything else, and when money is so tight there’s not much you can do to get your finances to run totally, especially when you have no savings. and not much of a safety net – I’ve spent two days sleeping on it already. a beach after I locked my keys in my apartment, had to wait for payday because my landlord charged £ 50 deposit to get the spare parts.

With withdrawals made just before being paid, a loan of £ 100-200 often made the difference between an unauthorized overdraft and / or a utility bill bounce, or a squeak throughout the month. The cost of £ 20 or £ 30 can translate into a horrendous APR, but compared to the amount charged by the bank for unpaid direct debit and overdraft, or utility or water company charges if the payment was bouncing back, it was tiny – those costs could climb up to £ 100 or £ 150.

What other realistic alternatives were there? Like most people with such tight finances, my credit rating was not good enough for standard, cheaper loans. This has left the payday loan providers – which operate very similarly to Wonga, with virtually no media coverage – but forced you to visit their buildings during office hours. Convenience matters.

Other options included pledging my laptop – in my case the only thing I had that was worth enough to disturb – which would have involved something that I absolutely couldn’t have lost. Or trying to hastily sell second-hand items – a method that can only work for a very long time.

Credit unions, hailed as the supposed solution to situations like these, are in practice slow to lend – useless if you’re trying in the short term to avoid bouncing a bill payment – and are often more conservative than other lenders, especially when the denial is not only demeaning but also hurts credit scores.

And that’s not to mention loan sharks, or similar, less tasty alternatives. We might not like lenders like Wonga, but their disappearance wouldn’t help anyone, especially since regulators finally took action to cap interest rates, fees, and other charges, making it harder for businesses to renew loans, which was often the time when the worst problems started.

Wonga is a symptom of a society in which millions of people – millions of families – cannot earn enough money to get by, even with the essentials. The businesses and services that spring from a company in this situation are often not acceptable, but they are rarely the real driver of the problem. There are exceptions – if you want a type of business that really makes problems worse, look no further than weekly hire. companies such as BrightHouse, which charge people huge overall sums.

If Wonga disappears tomorrow – which will not be the case; in practice, it would likely be redeemed immediately from the administration – many would applaud, but for many people who would use it, it would only make their already bad situation slightly worse.

Wonga has helped me, and no doubt helped a lot of other people. They don’t deserve any credit or praise for it, and have surely hurt many others. But too many people who write about struggling to get by have never done so and therefore don’t really understand where the issues are.

Let’s spend less time worrying about Wonga, and more thinking about why people need to use it.

James Ball is a former Guardian Special Projects Editor and the author of Post-Truth: How Bullshit Conquered the World
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