THE Bishop of Durham has condemned pay day loan companies who charge several thousand per cent interest as “morally wrong”.

The Right Reverend Justin Welby called for action to tackle the booming expanding sector which inflicts “terrifyingly high” levels of annual per centage rates (APR).

He accused companies of wilfully committing the sin of usury when dealing with families desperate for money.

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Online pay day loan deals can be completed in under an hour.

In one example, £250 borrowed for 14 days would see £290.78 repaid at an annual rate of 4,214 per cent.

Debt advisors in the North- East have already warned such loans are a massive problem – with some left with no option but to take one pay day loan to repay another.

The bishop said: “The rates of interest are absolutely terrifyingly high.

“The pay day lenders talk about an amount of money in cash terms that you pay extra at the end of the month, and then it does not sound too bad.

“But the reality is interest rates in the thousands of per cent, which at any time in history would have been called usury, and which the church has always considered a sin.

“I think that even now it is a sin to charge that level of interest.

It is just morally wrong.”

His comments come days after online loan firm Wonga announced it has launched a credit service for small businesses.

Darlington MP Jenny Chapman who has long campaigned against the high cost lenders, said: “I agree entirely with the Bishop’s comments.

“These are legal loans sharks that are exploiting people who are less wellequipped to deal with it. It is not just their rates, but the way they advertise their loans as everyday products, which they are not.

“Sadly, the Government is doing nothing at all about this. They have not even been active enough to kick it into the long grass.”

The bishop also singled out major banks for their role leading up to the financial crisis and the recession.

“What happened before 2008 is that the banks became the greediest of the lot, and the most self indulgent of the lot.

“If they were meant to be the policemen of our credit limits, the police were essentially on the side of avoiding the law rather than observing it. There is no doubt about who is responsible.”