In the United Kingdom, the think tank Institute for Public Policy Research revealed the most popular uses for payday loans involve everyday expenses rather than unexpected emergencies.
Forty-one percent of borrowers use payday loans for expenses such as groceries while nearly a third (32 percent) use them to pay for utility bills. More than one in five (22 percent) used these short-term loans to fund spending for Christmas.
The IPPR study found that some younger people used payday loans to fund a night out or to pay a mobile phone bill not the contingency plan that the loans were desiged to be used for.
"We need better alternatives for borrowers that provide more options when it comes to the length of loan and repayment options and affordability gradual repayment methods that don't come with a Scrooge-sized price tag need to be available," said Mathew Lawrence of the IPPR.
The results of the research point to a troublesome trend indicating payday loans aren't just used to help plug a gap after an expensive month, which has led IPPR to urge financial institutions to offer alternatives that are both accessible and flexible.
The research comes amid controversy surrounding the payday loans industry, with the latest involving a call for payday loan advertisements to be banned on children's programming. There already have been calls for payday loan adverts to be banned on children's TV channels, something that a lot of responsible lenders have taken on board, but campaigners are urging for it to involve daytime TV too.
The Advertising Standards Agency already bans payday loan adverts that are deemed to be "irresponsible", but says that legislation would need to be brought forward for an outright ban on children's programming to take place.
The concern is that viewing such advertisements from a young age could lead children to believe payday loans are an easy, harmless and appropriate way to access money.
Figures from Ofcom, the UK government-approved regulatory and competition authority for broadcasting, telecommunications and postal industries. reveal that children in the UK between the ages of 4 and 15 saw 596 million payday loan advertisements in 2012 the equivalent of 70 per child.