Citizens Advice helped with 5,554 payday loan problems in January to March 2015, a fall of 45% on the same period in 2014.
In January this year the Financial Conduct Authority implemented rules meaning interest and fees on all high-cost short-term credit loans were capped at a daily rate of 0.8% of the amount borrowed.
If borrowers fail to repay their loans on time, default charges must also not exceed £15 while the total cost including fees and interest is capped at 100% of the original sum.
Citizens Advice said there had been a steady decline in payday loan problems from April 2014 as a direct result of the new rules.
While an initial reduction in payday loan problems is welcome Citizens Advice said it is important “focus remains on the industry to ensure problems continue to decline”.
It also called for other high cost credit products, such as logbook and guarantor loans, to come under similar scrutiny after the charity finds they are causing significant harm to some borrowers.
Nearly 53,000 logbook loans were taken out last year, up 44% on 2011. Issues reported to Citizens Advice include high interest rates, excessive fees and charges and aggressive behaviour when collecting debts.
Borrowers can take out a guarantor loan by getting a friend or family member to act as their guarantor. This means if the borrower can’t repay the loan the guarantor has to.
Analysis from Citizens Advice suggested proper checks aren’t being carried out to assess that the guarantor has actually agreed to back the borrower or can afford the repayments if the borrower stops paying.
A separate Citizens Advice study, due to be published later this month and based on interviews with major high street banks, will show a quarter of payday loan users could have borrowed money from their own banks instead of payday lenders.
Citizens Advice chief executive Gillian Guy said: “Irresponsible high-cost lenders are sentencing people to a life in debt. The drop in the number of problems reported to us about payday loans is good news for consumers and demonstrates the impact a strong stance against irresponsible lending can have on people’s lives.
“It is important to remember that it is not just payday loans that have blighted people’s finances. Other high cost lenders like guarantor or logbook loans are also causing havoc with people’s finances.
“Following concerns raised by Citizens Advice the regulator and Government made a concerted effort to tackle payday lenders.
“Similar efforts are required for other high-cost credit companies. With a history of causing serious harm to borrowers, payday lenders still need to be kept under a watchful eye.”
