Citizens Advice has reported that young people aged 17 to 24 who are struggling to make ends meet are more likely to turn to risky credit options like a payday lender, than other types of credit.

Clients aged 17-24 of the national charity make up 10% of all of the charity’s serious debt cases, but are more than 15% of the cases where debt has been caused by taking out a high-cost loan. Payday loans accounted for 62% of the high-interest credit used by under-25s.

The new figures are part of an in-depth analysis of nearly 30,000 of the most serious debt problems experienced by Citizens Advice clients, 3,000 of which were debts held by people aged between 17 and 24. The charity reveals that even young people who are employed can get into serious financial trouble, with more than one in three severe debt clients aged under-25 being in work.

Less well-known types of high-interest credit, such as guarantor loans and logbook loans are also a cause of people falling into debt. Guarantor loans are those in which another individual is listed as being liable for repayments if the borrower cannot make payments.

Citizens Advice has also forecast that the number of logbook loans, where people use their car as a security to get a loan, is set to rise by 61% this year.

Data released by the charity today show that, of Citizens Advice clients in serious debt, 10% are aged between 17 and 24, of which 19% are in rent arrears, while only 8% of those are in debt because of mainstream credit (an overdraft, bank loan or credit card).

Meanwhile, 30% owe money on their mobile phone bills and 15% have debts on a credit card.

In addition, 23% are behind on their Council Tax payments, while 14% of those people with a payday loan debt had also fallen behind with their housing costs.

Gillian Guy, Citizens Advice chief executive, said: “Generation Y is fast becoming Generation Credit. The housing and money pressures on young adults are significant and it is a big concern that one in three young adults in serious debt is employed.

“It is a big concern that so many young adults are turning to some of the most expensive types of loan to get by. Taking out a payday loan in your late teens or early twenties can have significant and damaging consequences for later life. Often, high-interest loans end up spiralling out of control and many people in debt end up feeling they have nowhere else to turn other than a vicious circle of more borrowing.

“Young people face the dual challenge of getting a foot on the jobs and housing ladders. It is extremely welcome that the jobs market is recovering and that the number of young people out of work is falling, but problems about jobs and pay remain a big issue for under-25s. For young adults, accessing a job and home of their own are key to living independently and too many of those who are struggling to get by, end up in serious debt because of high-interest and dangerous loans.”