Payday loan users can expect to pay no more than $23 for every $100 they borrow under new rules proposed by Alberta’s government.
“What is chosen today is ultimately for the consumers,” said Service Minister Heather Klimchuk after unveiling the new plan in the legislature.
The average payday loan company would charge $30 for every $100 borrowed, according to a consultation report from the government.
Stan Keyes, president of the Canadian Payday Loan Association, says the new cap would separate the good companies from the “irresponsible” ones.
“There is no doubt that many businesses will have to change their business practices,” said Keyes.
Payday loan companies must also offer two-day cooling off periods to consumers who want to return money without any costs and all payday loan businesses must be licensed by the province.
The new rules that come into effect on Sept. 1 would also put an end to “rollover” loans — or paying off an old payday loan with another loan. Rulebreakers could pay fines as high as $100,000 or face up to two years in jail, warned Klimchuk.
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