Calls to end predatory lending: ‘When someone is drowning, you don’t drop anchor’



During the last federal election, the federal government made a commitment to take action on the interest charges and fees associated with payday loans. Now social agencies are beginning to pressure the government to keep its promises.

Calgary-based nonprofit agency Momentum released a policy paper this week calling on the government to criminalize high-interest loans. Currently, the Canadian Criminal Code defines a criminal interest rate as greater than 60% per annum.

“That’s way too high, especially for the people we see living on low income or on precarious income to be able to get out of debt,” said Courtney Mo, head of policy and research at Momentum. Mo also noted that payday loans are actually exempt from criminal code regulations.

“So we’re seeing interest rates here up, almost 400%. And that’s not including the extra fees, insurance, or other costs associated with high-cost credit. So it can be quite difficult to understand what you’re actually paying for the full cost of a loan,” Mo said. loan – so (effectively), if you have this loan for up to a year, let’s say you would pay $1,170 for the cost of this loan of $300.”

Demonstration against payday loans, Tuesday, December 14, 2021


Momentum would like to see the criminal interest rate lowered to 36%, including all fees and other charges, and wants the exemption for payday loans removed.

Tina Michelle Moller has used payday loans before. The former postwoman lost her job after a back injury.

“A disability is something you can’t always plan for. And it happens with a lot of families and people that something happens. It’s an emergency, they either incur new costs or lose income,” Moller said.

With the help of Momentum’s programs, Moller not only paid off her debt and accumulated savings, but also developed a new career: she is now a financial consultant, helping others avoid the trap of easy credit and debt. raised.

“Some people have bad habits, regardless,” Moller said. “Maybe they’re in debt, because they bought the last phone and their bill is $150 a month and they can’t afford it. Right?

“There are people who do that,” she said, “but there are also people who are in situations where they couldn’t do anything to avoid the loss of income or the poverty in which they are. entered”.

“But if you’re paying 36% (interest), that means your debt will double every two years. And, I mean, that’s a very dangerous situation to be in when compound interest is working against you.

“But many, many people, they only see the need now,” she added. “They don’t think about what’s going to happen in two years. And that’s the real danger that there’s no obligation for payday lenders to explain to you the dangers of high-interest loans.”

In his payday loans annual report the Government of Alberta notes that 73,080 people in Alberta took out 288,401 payday loans in 2020. The total value of these loans was $219,543,385.51

The breakdown of the amounts of these loans was as follows:

Loans offered between $1 and $499


Loans offered between $500 and $999


Loans offered between $1,000 and $1,500



A few blocks south of Momentum’s office in southeast Calgary, a handful of protesters — all affiliated with ACORN (Association of Community Organizations for Reform Now) Canada — staged a protest outside a Money Mart on International Ave. It was part of a national day of action organized by the organization, which is also calling on the federal government to intervene with payday loan companies.

In a press release posted on its website, ACORN Canada is asking supporters to flood Middle Class Prosperity Minister Mona Fortier’s inbox with a letter calling for several changes to loan procedures, including: Lowering the interest rate on installment loans from 60% to 30%; include all fees and commissions associated with a loan in the interest rate; creating a federally funded Fair Credit Benefit so that all low-income people have access to low-cost emergency credit options and support postal banking services in all cities; and reducing the NSF fee from $45 to $10.


With the federal Criminal Code exemption, the regulation of payday loans falls to the provincial government.

In an emailed statement to CTV, Tricia Velthuizen, press secretary to the Minister of Service Alberta, said: “Alberta has some of the strictest payday loan regulations in the country, and we are committed to protecting Albertans from predatory lenders We are not currently conducting a review of the province’s robust payday lending regulatory system.


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