New legislation that makes Alberta’s payday loan fees the lowest in Canada came into effect Monday.
As of Aug. 1, the maximum amount payday lenders can charge was reduced and companies are required to give borrowers more time to pay back the money they owe.
The provincial NDP tabled the draft legislation, An Act to End Predatory Lending, in the legislature in May. The bill cuts the maximum payday loan fee to $15 per $100, from $23. And that $15 has to include any additional services such as insurance attached to the loan.
It also requires lenders to give borrowers two pay periods in which to pay back the loan. Prior to the bill, a borrower had until their next payday to do that.
“Last fall, Albertans told us they want lower interest rates and stronger consumer protections. Today, it’s the law,” Service Alberta Minister Stephanie McLean said.
“We have put an end to 600 per cent predatory interest rates and vicious cycles of debt, with fair rules that protect Albertans.”
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The Act also requires government to encourage financial institutions and community groups to offer alternative, short-term loans that are fair and accessible.
“I am so pleased First Calgary Financial will launch its Cash Crunch loan on August 22,” McLean said. “It’s credit with reasonable rates, longer payback terms and financial literacy supports that set Albertans up for financial health, not ruin.”
The executive director of Vibrant Communities Calgary said the payday legislation will help its poverty reduction strategy.
“With dramatically reduced interest rates and more time to pay back loans, Albertans will keep more of their hard-earned money,” Franco Savoia said. “And we support more banking options designed for the needs of the working poor in Alberta.”
With files from Anna Mehler Paperny