This was exactly the point the chap made on Radio 4 this morning. The banks are far, far worse with regard to unauthorised overdrafts - I think most of us might have been there at some time or another.

I can see parallels with a bond market here: Prudent countries like Germany pay 1.1% on their issued bonds while idiots like Greece, Italy and Portugal pay 7% to borrow.
The saying still holds, fools and their money etc etc...
But hey, it's easier to blame somebody else!

Because, of course, there's no such thing as irresponsible lending.

What's next, a return to debtors' prisons?

Erm, hello, good morning!
That's why they charge so much much because they are lending to unreliable borrowers. To people who can't even get a credit card because as soon as they get it they'll buy an xbox and 40" plasma tv and they can't pay it back! The default rates must be insane on these debts...

They charge so much because it's a short term investment effectively.

Rates of interest in terms of APR are only really applicable to a year long (hence the A), to compare a payday loan is to compare a drag car in a single race to a very efficient car driving for a week, if the fuel margin goes up you see a very fast and short lived return from the drag car but a low and sustained return from the efficient car.

People who can't afford to pay off credit cards in full at the end of each month are actually better clients, almost all clients will pay it back in full (even those that default on payments usually make payments in the end, those that don't are up financial poop creek hence the IVA and bankruptcy which are far more critical in terms of lending), a lot of people with 'poor' repayment actually get MORE credit and get into a vicious spiral with more and more borrowing by living beyond their means.

I can't say any more details due to things I can't say but the sites like Wonga are actually far better than a bank overdraft. They might get a rap for being 'loansharks' but it's not entirely warranted