Payday Loans Still Rising
With a recent study by the Canadian Federal government. This study has shown that payday loan usage has doubled over the past 5 years. This is a bit alarming as these Canadians are relying on these high interest loans from payday companies just to make it from paycheck to paycheck. This type of usage works to increase ones overall debt when the bills and loans just continue to pile on.
In 2014, the share of Canadians that are using these payday loans increase 4.3%, while it increased from 1.9% in 2009. During this same time period household debt increased from 145% in 2009 to 160% in 2014 and this year, household debt is at the highest levels just over 165%.
Just under 90% of the payday users started using this service to cover expenses that were unexpected, to avoiding late charges and to cover expenses that were expected.
Make Wise Decisions – Know the Interest Rates You are Paying
From the survey, under half of the respondents actually know what the actual interest was being charged. This can be very dangerous as there is the potential that the interest on the Payday loan could be higher than the interest you are charged on your credit card. This kind of usage can further lead one into more debt.
The agency called the trend “worrisome” and announced it plans to change how it communicates with consumers, to make sure they know they have options other than payday lenders.
Payday loans can be dangerous and expensive means to borrow money. The fact that more Canadians are borrowing shows that the truth about payday loans and the actual cost needs to be brought forth so people can make better educated decisions with their money.