Hearts fan the Reverend Ian Galloway hit out at the short-term loan firm for charging an annual compound percentage interest rate of over 4000%.
Pay-day loans companies offering high-cost cash are among the fastest-growing businesses in the UK. The sector is valued at £7.5 billion, according to the Office of Fair Trading. Many use aggressive marketing. Wonga also sponsors Premier League team Blackpool.
Galloway, convener of the Church of Scotland’s church and society council, said: “These rates of interest are colossal.
“Wonga probably made Hearts an offer they couldn’t refuse and, I speak as a Hearts fan, they should have. Wonga and others like them perpetuate poverty by giving loans with colossal interest rates that trap the poorest people in debt, which is both immoral and unjust.
“A significant number of people in Scotland have rising debt problems. There is the potential for this to get much worse when people are paying such high rates of interest.”
A Hearts spokesman repeated what was said at the sponsorship launch in April – that the club was “delighted” with the two-year deal. Wonga branding is expected to appear on new football shirts bought for children.
According to Wonga, a £301 loan for 28 days costs £90.14 in interest and fees. This represents an annual rate of interest of 360% but an “APR Representative” rate of 4214%, which is a daily compounded figure over a year.
A spokeswoman for Wonga.com said. “We sit outside the pay-day loans industry. This is a new product for a new generation of people looking for short-term loans. The APR Representative is really irrelevant and misleading but we are expected to put it on the website. We don’t compound interest and we don’t make loans for a year.”