Figures from R3, the association of business recovery professionals, show that 40 per cent of people who took out payday loans said their financial situation had worsened.
Following such loans, people are undertaking increased overdrafts in an attempt to pay back what they owe, plus the rising interest.
Arwyn Bailey, spokesman for ACFA, said it was dismayed at the lack of government support in capping rates.
Mr Bailey said: “The government must act immediately to curtail one of the clearest social evils of our day.”
ACFA is suggesting a cap on interest rates to help those in debt, the promotion of existing debt counseling and education for young people to teach them about debt.