Alberta cities, organizations band together to fight 600% payday loan interest rate
WATCH ABOVE: Alberta cities and social organizations are teaming up to fight 600 per cent pay day loan interest rates. Fletcher Kent reports.
EDMONTON — Alberta cities and social organizations are teaming up to fight 600 per cent payday loan interest rates. They plan to work together to pressure the province to change the regulations for the payday loan industry.
The criminal code allows for a maximum interest rate of 60 per cent on loans, but exceptions are permitted if a province regulates the payday load industry. Alberta created those regulations in 2009 and allows licensed companies to charge 600 per cent interest rates.
The Central Alberta Poverty Reduction Alliance wants the province to get rid of those exemptions.
“It can really keep people trapped in poverty. I think that’s the thing that you have to understand,” said Danielle Klooster. “That just doesn’t help people in the long run. It takes money out of their family’s pockets. It takes food off of their family’s tables.”
READ MORE: Chequed out – Inside the payday loan cycle
Last week, Red Deer city council voted to help with lobbying efforts.
“I think in terms of protecting our at-risk citizens, our vulnerable citizens, the working poor, all orders of government have responsibility,” said Red Deer Mayor Tara Veer.
Calgary and the Alberta Urban Municipalities Association are already on board. Edmonton hasn’t yet discussed joining the effort.
“It’s stunning, it’s shocking,” said Ward 6 city councillor Scott McKeen. “It’s further preying on people who are in desperate straits.
“I’ll have to talk to some of my colleagues about this, but it seems to me it would be a slam dunk to join Red Deer and Calgary.”
The association representing payday loan companies said an interest rate cut is bad policy.
“It would shut down the payday loan industry altogether,” said Stan Keyes, president of the Canadian Payday Loan Association.
Keyes said there are people who need money and eliminating the lender doesn’t get rid of the need.
“The demand would have to shift to unlicensed lending,” said Keyes. “That has severe problems for the borrower because of much higher interest rates.”
The minister responsible wasn’t available for an interview Tuesday, but a spokesperson said the government is planning to review payday loan regulations.
Statistics Canada estimates three per cent of Canadians have accessed a payday loan.
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