Metro News Ottawa: Here’s why – according to one study – some people turn to payday loans over bank loans

Anti-poverty activists want the government to ensure Canada’s big banks serve those most in need so that they aren’t firced to turn to payday-loan companies.

 

Acorn Ottawa, working with the Canadian Centre for Policy Alternatives, surveyed 268 members of their organization on payday loans.

 

They found roughly 45 per cent had no credit card or overdraft protection, while an additional 19.5 per cent had a credit card but it was maxed out.

 

Acorn member Cordelia Daniels said she had few options when she took out a payday loan.

 

“The issue was that I ran out of money and I had to find it from somewhere,” she said.

 

She said previously she has borrowed from friends, but that wasn’t an option.

 

“This particular turnaround there was nobody and I still needed to feed my two teenagers and myself.”

 

She said while she paid the payday loan back quickly and didn’t get caught in an interest rate trap, she could see how people would. 

 

Gisèle Bouvier president of Vanier’s Acorn chapter, where a Metro analysis found a concentration of payday loan operators, said the survey demonstrates payday loans are profiting of people with no other options.

 

“It shows that 70 per cent of the people who go to these places earn less than 25,000 per year,” she said.

 

Bouvier said major banks should be offering overdrafts and other credit services for people with limited means so people don’t have to use payday loan firms. She said she suspects they are trying to avoid the extra work.

 

“I don’t think they want people working hours doing hundreds of little loans.”

 

She said Acorn would be pushing for changes when the government next reviewed banking regulations in 2019.

 

 

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Article by Ryan Tumilty for Metro News Ottawa