In discovered that many users are unaware of the high cost of using the loans with just 43 per cent understanding that it would be cheaper to get a cash advance on a credit card.
However, most (65 per cent) of those polled did not have a credit card and 88 per cent did not have a line of credit. This was due to them not having access to traditional credit products.
“Payday loans are an expensive way for consumers to borrow money. The uptake of these short-term, high-cost loans has more than doubled in Canada recently, to four percent of Canadian households,” commented FCAC commissioner Lucie Tedesco, adding “This is, in my view, a trend that merits more attention.”
Although most of those using payday loans had low-to-moderate incomes, 20 per cent had household incomes above $80,000 with 7 per cent reporting incomes above $120,000.
Most users of payday loans (89 per cent) said they did so to cover necessary expenses.
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The Financial Consumer Agency of Canada has reported the findings of a survey it carried out earlier this year of 1500 users of payday loans.