Understanding Payday Loan Use and Perspectives
Notice
As part of its mandate, FCAC monitors and conducts research on trends and emerging issues that may have an impact on consumers of financial products and services. The goal of this research was to broaden understanding of the payday loan landscape in Canada and may help inform provincial regulation, policy development and financial industry practices.
Payday loan providers are regulated at the provincial/territorial level. FCAC supervises the compliance of federally regulated financial institutions with their obligations under federal laws and regulations, as well as codes of conduct and public commitments.
Information contained in this publication or product may be reproduced, in part or in whole, and by any means, for personal or public non-commercial purposes, without charge or further permission unless otherwise specified. Commercial reproduction and distribution are prohibited except with written permission from the Financial Consumer Agency of Canada.
For more information, contact:
Financial Consumer Agency of Canada
427 Laurier Ave. West
Ottawa ON K1R 1B9
www.canada.ca/en/financial-consumer-agency
Cat. No. FC5-98/2022E-PDF (PDF, English)
ISBN 978-0-660-78191-4
© His Majesty the King in Right of Canada, as represented by the Minister of Finance Canada, August, 2025.
Aussi disponible en français sous le titre Comprendre l’utilisation et les perspectives des prêts sur salaire.
Executive summary
Background
A payday loan is a small, short-term loan that is provided by a provincially licensed lender and that typically carries a high interest rate and high fees. As shown on the Financial Consumer Agency of Canada (FCAC) payday loans information page, such loans come at a substantially higher cost compared with other more affordable forms of credit, such as lines of credit, overdraft protection, or cash advances on credit cards. A payday loan is sometimes also referred to as a high-cost loan, high-cost credit, or a predatory loan.Footnote 1
Payday loans are marketed as “filling a need” by providing cash (typically up to $1,500) to consumers who may face barriers accessing funds through more traditional means (like federally regulated financial institutions, family, or friends) or who may not have the means to plan for emergency situations. However, payday loans’ high rates and unclear fee structures can lead to chronic borrowing and may leave borrowers trapped in a “debt cycle,” where an increasing portion of a borrower’s income is directed towards financing their debts. This phenomenon is not unique to Canada and has led other international jurisdictions (including the United States and United Kingdom) to institute safeguards to mitigate the risk of debt cycles brought on by predatory loans.
In Canada, payday loans are exempt from the criminal rate of interest provided certain conditions are met [i.e. the loan is $1,500 or less for a term of 62 days or less, issued by a licensed lender or someone who is specifically authorized by the laws of a province, and the province is designated by the Governor in Council in accordance with subsection 347.1(3) of the Criminal Code]. In order to receive this designation, a province must have in place legislative measures that protect payday loan users and must provide for limits on the total cost of borrowing for payday loan agreements. Federal efforts to limit the negative influence of predatory high-cost loans on consumers are aimed at supporting provincial regulation, and highlight the need for broader access to quality financial services for Canadians, including vulnerable groups. Improved access to mainstream banking and credit unions, including small-credit products and overdraft protection, would reduce reliance on payday loans.
FCAC’s interest in researching and reporting on this subject is borne from its core responsibility to protect financial consumers in Canada. As part of this mandate, FCAC is legislated to monitor, evaluate, and promote awareness of trends and issues that may affect financial consumers. FCAC undertook the current research to understand payday loan use in Canada and its broader implications for financial consumer well-being. The aim of this research is to generate actionable insights that can be used by regulators, educators, policy makers, and the financial ecosystem at large, to enhance quality financial inclusion, protection and literacy in the service of greater financial well-being for consumers in Canada.
About this research
This report describes payday loan use in Canada, and is supported by findings related to high-cost credit from 2 surveys conducted by FCAC: the Monthly Financial Well-Being Monitor, with data collected from August 2020 to December 2023, and the Payday Loan Users Survey, conducted between December 2022 and January 2023. A methodological report on the Payday Loan Users Survey was published on the Library and Archives Canada website in July 2023.
The data gathered in both surveys predate the lowering of the criminal rate of interest in Canada to 35%, which came into effect on January 1, 2025. Criminal Interest Rate Regulations limit the cost of borrowing in provinces with payday lending regimes to $14 per $100 borrowed, and limit the amount payday lenders can charge for dishonoured payment instruments to $20 or less.
In addition to the findings of the 2 surveys, this report also includes a description of the risks of payday loan products to consumers, such as debt cycles and lower financial well-being, and presents secondary research on approaches to payday lending adopted by international jurisdictions including the United States and the United Kingdom.
Key findings
User demographics are diverse, but consumers living with vulnerabilities are more likely to access payday loans
Payday loan users are not a homogenous group; they represent a diverse demographic profile that includes overrepresentation among certain vulnerable populations. For example, lone parents, individuals with disabilities, renters, and those living in households that earn less than $40,000 annually are more likely to access payday loans than the general population.
Payday loan users often face financial struggles and lack savings
While the extent of financial challenges varies, the nationally representative Monthly Financial Well-Being Monitor shows that 43% of all payday loan users report “struggling a lot”, and 90% of these people have no emergency savings and/or face difficulty affording essentials like food.
Payday loan users misperceive the comparative cost of payday loans
Payday loan advertisements frequently emphasize immediate access to cash and minimal eligibility requirements, which may cause consumers in times of need to underestimate the risks. The Payday Loan Users Survey highlights how the complex structure and marketing of payday loan products may influence consumers’ perceptions of the loans’ overall cost. For instance, 26% of respondents believed that payday loans cost the same as traditional bank loans, and only 25% recognized payday loans as more expensive than other credit options.
Debt cycles and consumer awareness
While these findings do not establish causality, they are consistent with the notion that use of payday loan products can lead consumers to get trapped in a debt cycle.Footnote 2 The findings support the need to raise awareness about the risks of payday products, as well as the need for innovative solutions that could mitigate against the impact of high-cost credit on vulnerable consumers.
Payday loan use negatively impacts the financial well-being of users
The findings from both the national Monthly Financial Well-Being Monitor and the Payday Loan Users Survey provide evidence that payday loan users experience greater risks and negative impacts to their overall financial well-being when compared to non-users, and that that payday loan products contribute to financial hardship.
Conclusions
FCAC’s data on payday loan use come from 2 distinct surveys, and highlight how payday loan products may negatively affect consumers’ financial well-being. These findings can support the Department of Finance Canada in its ongoing discussions with provinces and territories on predatory lending, and contribute to evidence-based policy development to support Canadians’ financial well-being. This report also highlights alternatives to payday loans, and profiles international jurisdictions that have instituted national low-cost credit solutions for consumers to encourage further exploration of alternative policies or practices that could provide access to more affordable credit options for Canadians.
Introduction: Understanding payday loans in Canada
Payday loans are an expensive way to borrow money. They differ from other forms of credit offered by major banks or credit unions in multiple ways. While applicants can qualify without a credit check, the interest rates are significantly higher (for example, $14 per every $100 borrowed in all provinces except Quebec; see Figure 1). Repayment timelines are typically short; at the time of the surveys, the repayment timelines required borrowers to repay some or all of the loan by their next paycheque—usually within 14 to 30 days.Footnote 3 ResearchFootnote 4 shows that the high-cost, short repayment terms, and compounding effect of loan renewals can exacerbate existing financial challenges for many people who turned to payday loan products due to financial challenges in the first place.
Quick fact
As of January 1, 2025, Canada capped payday loan costs at $14 per $100 borrowed and lowered the criminal interest rate from 48% annual percentage rate (APR) to 35% APR.
Figure 1 illustrates the cost of a sampleFootnote 5 payday loan ($300 loan for 14 days) assuming timely repayment, compared to other products like a line of credit, overdraft protection on a chequing account, or a cash advance on a credit card. These comparisons assume that the borrower has a relationship with a financial institution such as a bank or credit union, and therefore has access to these alternative credit options. It is important to note that individuals with low or no income may face challenges accessing such products, as financial institutions may either decline to extend these options or impose higher interest rates and additional fees to compensate for perceived risk. As shown, a payday loan under these terms can cost 7 to 9 times more than these alternatives.
Figure 1. Comparing the cost of a payday loan with a line of credit, overdraft protection on a chequing account, and a cash advance on a credit card (based on a $300 loan for 14 days)
Text version: Figure 1
| Line of credit | $5.92 |
|---|---|
| Overdraft protection on a bank account | $7.42 |
| Cash advance on a credit card | $7.65 |
| Payday loan | $42.00 |
As noted, Figure 1 represents a case where the repayment was made on time. However, failing to make payments on time can lead to additional consequences.
Evidence shows that in some cases, a one-time or seasonal borrower can become a chronic borrower, which can lead to a “debt cycle” where an ever-increasing portion of their income is directed towards financing that debt.Footnote 6 As this amount grows, it can become increasingly difficult to pay off the loan, particularly when the credit is not being used to build the person’s capacity to repay the loan, but rather to cover the increasing costs associated with the loan. Figure 2 offers an illustration of this dynamic.
Hidden costs of payday loans
Depending on provincial laws, payday lenders may charge extra fees or interest on the outstanding amount, increasing the total amount owed. If the loan is not repaid on time, these charges can significantly hike the cost of borrowing.
Figure 2. The payday loan cycle
Text version: Figure 2
The Payday Loan Cycle
Hardship leads to financial exclusion, which makes individuals turn toward alternative lenders; that exacerbates vulnerability, which is in turn is compounded by even more hardship....
Previous research shows that the need to access payday loans can be driven by an emergency or the inability to easily access funds in a more affordable way.Footnote 7 Subsequently, the loans can become costly to repay, potentially reducing the consumer’s future disposable income, creating a need to rely on additional loans. FCAC’s findings (described below) support these findings and demonstrate that the use of payday products can be a detriment to financial well-being.
The findings in this report contribute to broadening the understanding of the demographics of payday loan users and how payday loans can affect consumers’ financial well-being. These findings may be used to further advance the objectives of the National Financial Literacy Strategy and the implementation of evidence-based policy advice to support Canadians’ financial well-being.
In recent years, the Government has taken several actions to crack down on predatory lending practices. Budget 2024 committed to enhancing enforcement of the criminal rate of interest, and committed to working with provinces and territories to harmonize and enhance consumer protections across Canada. Amendments to lower the Criminal Rate of Interest to 35% APR, and capping payday lending at $14 per $100, first announced in Budget 2023, came into force on January 1, 2025.
Success stories for inclusive lending
Efforts in the U.S. and U.K. aim to make small loans safer and more inclusive. For example, most U.S. banks offer low-cost small loans that cost consumers an estimated 15 times less than payday loans.Footnote 8 ,Footnote 9 The U.K. piloted no-interest loans for low-income individuals, which led to very high repayment rates.Footnote 10
The evidence presented in this report emphasizes the need to improve access to quality financial services for all Canadians, to reduce their reliance on payday loans. By exploring alternatives such as small-credit loans and overdraft protection, the financial ecosystem can identify strategies to promote quality financial inclusion and reduce dependence on expensive payday lending, particularly for vulnerable consumers in Canada.
Oversight of payday lenders: FCAC's role explained
While FCAC monitors financial trends, it does not regulate payday lenders. That responsibility lies with provinces and territories. Section 347.1 of the Criminal Code exempts licensed lenders from interest rate limits, and 9 provinces have such regimes. Quebec, instead, restricts lending permits if rates exceed 35% APR.
Survey methodology
FCAC surveyed payday loan usage in Canada in 2 distinct ways: through the Monthly Financial Well-Being Monitor (a nationally representative survey) and through the Payday Loan Users Survey (a non-representative survey focused specifically on payday loan users).
Monthly Financial Well-Being Monitor
Launched in August 2020, the Monthly Financial Well-Being Monitor is a nationally representative online and telephone survey. Approximately 1,000 Canadians aged 18 and older participate in this survey every month. The data used for this report span from August 2020 to December 2023. Of the 20,248 respondents surveyed during this period, 266 reported using payday loans for day-to-day expenses.Footnote 11
For additional details on the methodology, please refer to the Canadian Financial Well-Being Monitor Survey Methodology Report, available through Library and Archives Canada.
Payday Loan Users Survey
The High-Cost Credit Users Survey, which was not a nationally representative survey, was conducted online between December 2022 and January 2023. The survey specifically sampled individuals who had used high-cost credit products, such as instalment loans, lines of credit, or payday loans, between 2019 and 2022. Respondents were categorized into 1 of these 3 groups (instalment loans, lines of credit, payday loans) and were excluded if they had not used any of the 3 credit types within that period. The survey included 2,307 Canadians aged 18 and over. The High-Cost Credit Users Survey focused on the 770 payday loan users who reported taking out payday loans at least once between 2019 and 2022. (Note: The High-Cost Credit Users Survey is referred to elsewhere in this document as the Payday Loan Users Survey.)
For additional methodological details, refer to the Public Opinion Research Methodological Report on High-Cost Credit Users, also available through Library and Archives Canada.
Key findings
Monthly Financial Well-Being Monitor
Data from the Monthly Financial Well-Being Monitor show that, while payday loans are used by a variety of demographics, there is significant overrepresentation among groups that face greater financial vulnerabilities (Figure 3). These users often share characteristics such as lower income, limited access to affordable credit, and higher financial stress levels.
Figure 3. Canada, payday loan users percentage by demographic group, 2019-2023
Text version: Figure 3
| How to read this figure: For a given demographic group, such as lone parents, x% of them used a payday loan in the past 12 months, compared to an overall baseline of 1.7%. | |
| Lone parent | 6.2%* |
|---|---|
| Indigenous Peoples | 5.5%* |
| Did not finish high school | 3.8%* |
| Unemployed | 3.7%* |
| Disability | 3.5%* |
| Renter | 3.1%* |
| Low income (<40k) | 2.9%* |
| Newcomer (≤10 years) | 2.0% |
| Women | 1.8% |
| Visible minority | 1.7% |
| Overall (n = 20,248) | 1.7% [Total number of payday loan users = 339 (weighted)] |
| Senior (65 and above) | 0.5%* |
Further to the debt cycle presented earlier, Figure 4 illustrates the many financial and behavioural challenges that payday loan users face. For example, 88% of payday loan users report a lack of emergency savings, compared to 50% of non-users. The data also show that 86% of payday loan users report often being short on money for essential needs such as food, compared to only 31% of non-users.
Figure 4. Canada, percentage of people struggle financially by payday loan usage, 2019-2023
Text version: Figure 4
| Non-users | Payday loan users | |
|---|---|---|
| Borrow to buy food | 31.28% | 85.74% (represents statistic significance difference at p = 0.05) |
| Borrow from family or friends | 19.22% | 73.67% (represents statistic significance difference at p = 0.05) |
| Behind on bills | 6.88% | 45.70% (represents statistic significance difference at p = 0.05) |
| Have no emergency funds | 49.63% | 87.62% (represents statistic significance difference at p = 0.05) |
| Debt increase | 39.75% | 63.73% (represents statistic significance difference at p = 0.05) |
| Credit score decrease | 23.88% | 44.81% (represents statistic significance difference at p = 0.05) |
| Victim of fraud | 9.83% | 27.71% (represents statistic significance difference at p = 0.05) |
| Consumer proposal or bankruptcy | 1.70% | 15.12% (represents statistic significance difference at p = 0.05) |
| Income decrease | 35.03% | 48.42% (represents statistic significance difference at p = 0.05) |
| Stress increase | 62.70% | 68.52% |
| Seek advice to manage expenses | 10.73% | 28.20% (represents statistic significance difference at p = 0.05) |
| Have a budget | 55.85% | 66.0% (represents statistic significance difference at p = 0.05) |
| Seek advice to manage debt | 29.08% | 26.41% |
The Monthly Financial Well-Being Monitor data categorize payday loan users into 3 subgroups (“struggling a lot”, “struggling somewhat”, and “somewhat secure”). These subgroups are based on the respondents’ average financial well-being scores using the United States’ Consumer Financial Protection Bureau (CFPB) Financial Well-Being Scale with modified cut-off scores (Figure 5).Footnote 12 Based on these indicators, 74% of payday loan users in the study were classified as “struggling a lot” or “struggling somewhat”. This segmentation provides insight into the financial circumstances of payday loan users, presented below.
Figure 5 shows that over 40% of payday loan users from the Monthly Financial Well-Being Monitor are categorized as “struggling a lot”. These users face greater challenges than others across many behavioural indicators of financial well-being. A significant proportion of respondents in the “struggling a lot” category report facing challenges in managing essential expenses, like food. For instance, more than 90% of this category of payday loan users reported having no emergency funds or being short on money for essentials like food, as shown in Figure 4.
Figure 5. Percentage of payday loan users vs. non-users in each of the 3 subgroups, based on their Consumer Financial Protection Bureau (CFPB) financial well-being scores
Text version: Figure 5
| Struggling a lot 0-37 |
Struggling Somewhat 38-49 |
Somewhat secure 50+ |
|
|---|---|---|---|
| Payday loan users | 43% |
31% | 26% |
| Non-users | 13% | 25% | 62% |
While the Monthly Financial Well-Being Monitor offers insights into the demographics and financial behaviours and well-being of payday loan users, findings from the Payday Loan Users Survey describe how consumers perceive these loans. The remaining data in this section of the report are taken from the Payday Loan Users Survey.
Payday Loan Users Survey
Data from the Payday Loan Users Survey, collected from December 2022 to January 2023, reveal that payday loan users often belong to groups facing significant financial vulnerabilities. These include lone parents, Indigenous people, individuals with disabilities, and renters. Additionally, payday loan use is overrepresented among individuals with lower household incomes, newcomers, and those who face barriers to traditional credit access, such as those without a high school diploma, or who are unemployed (Figure 6).
Figure 6. Payday loan user demographics
Text version: Figure 6
| Low income (< 55k) | 57% |
|---|---|
| Newcomer (< 20 years) | 48% |
| Renter | 48% |
| Women | 41% |
| Disability | 38% |
| Lone parent | 36% |
| Indigenous Peoples | 33% |
| Visible minority | 31% |
| Unemployed | 9% |
| Did not finish high school | 7% |
| Senior (65 and above) | 5% |
These demographic profiles highlight the diversity of payday loan users while also underscoring the financial challenges many of them face. For instance, many payday loan users face financial instability, struggle with daily expenses like purchasing food, and lack emergency savings. The Payday Loan Users Survey also reveals that 30% of payday loan users report difficulties repaying their loans on time.
Did you know?
20% of payday loan users from the Payday Loan Survey and 21% from the Monthly Financial Well-Being Monitor earn more than $80,000 per year.
With respect to the debt cycle relationship, the Payday Loan Users Survey further showed that while the most common method for repaying payday loans is a paycheque (48%), 7% of payday loan users stated they paid back their loan using a new payday loan, despite regulations in many provinces prohibiting payday lenders from offering rollover loans (where a new payday loan is issued to pay off an existing payday loan). Additionally, it is notable that the second most selected repayment method was to access funds through a savings account, with 10% of users reporting this option. However, it is unclear from the survey results why individuals with funds in a savings account had used a payday loan to access funds. Figure 7 illustrates the repayment patterns reported in the Payday Loans User Survey.
Figure 7. Means to repay payday loans
Text version: Figure 7
| Paycheque | 48% |
|---|---|
| Savings account | 10% |
| Have not yet paid off loan(s) | 10% |
| Credit card or line of credit | 9% |
| Sold something | 8% |
| New payday loan | 7% |
| Borrowed from friends or family | 7% |
| Bank overdraft | 5% |
| RRSP or other | 4% |
| Bank or credit union | 4% |
| Went to pawnbroker | 4% |
| Other | 4% |
Additionally, there is evidence of a subgroup of payday loan users in the Payday Loans Users Survey who rely on payday loans repeatedly. A total of 50% of payday loan users reported taking out payday loans more than once during the survey period, compared to 36% who reported taking out a payday loan only once, and 14% who did not know or preferred not to answer. These findings point to the risk of payday loan users entering a debt cycle characterized by frequent borrowing.
The Payday Loan Users Survey highlights several key findings about consumers’ perceptions and experiences with payday loans. The complex structure and marketing of payday loan products may influence consumers’ perceptions of the loans’ overall cost. While most payday loan marketing highlights their ease of access and ability to meet immediate needs, the high fees and long-term costs of payday loans are often left out.
Did you know?
26% of respondents believed that payday loans cost the same as traditional bank loans, and only 25% recognized payday loans as more expensive than other credit card advances.
Figure 8. Payday loan users’ perception of the cost of payday loans
Text version: Figure 8
| Same as bank loan | 26% |
|---|---|
| More costly than bank loan, less costly than credit card cash advance | 24% |
| Same as credit card cash advance | 11% |
| More costly than credit card cash advance | 25% |
| Don’t know | 15% |
These patterns, highlighted by Figure 8 from the Payday Loan Users Survey, further emphasize the need for improved awareness of and access to quality financial services for Canadians, particularly those facing financial vulnerabilities. As the data from the survey show, many payday loan users are unaware of or unable to access more affordable or sustainable credit alternatives, which reinforces the importance of expanding access and educating consumers about alternative financial products, such as small-credit loans and overdraft protection.
Observations
The findings from this report describe some of the challenges faced by payday loan users, and broader implications for financial consumer well-being and protection. The observations outlined below combine primary and secondary research findings. These insights aim to inform evidence-based strategies that align with FCAC's mandate to protect and educate financial consumers in Canada. The need to improve access to quality financial services for Canadians, particularly vulnerable groups, emerges as a central theme throughout these findings.
There is a need for tailored financial solutions, particularly for vulnerable groups. Payday loan users are not homogenous. Some face severe financial challenges, while others experience varying levels of financial well-being. That said, lenders do not tailor payday loan products to meet diverse needs. While the FCAC data patterns described above do not establish causality, and the demographic trends in both surveys differ, they highlight the increased likelihood of payday loan use among these groups.
The need to protect Canadians living with vulnerabilities
FCAC data shows a disproportionate number of individuals who rely on payday loans face financial vulnerabilities, including lone parents, Indigenous people, people living with disabilities, and low-income households. This reliance may often be due to a lack access to affordable credit alternatives.
Developing financial products that better align with the needs of vulnerable consumers—like affordable small loans or emergency savings vehicles—could yield many positive benefits, such as relieving financial pressure or stress and enhancing financial inclusionFootnote 13 goals.
Canada can also take inspiration from international best practices to tailor financial products and enhance consumer protection. Certain international jurisdictions have already launched initiatives that offer affordable credit alternatives to the public. For example, in Ireland, the government recently enacted legislation to restrict the interest and term of so-called “moneylending” loan agreements. This legislation includes protections such as a 10-day cooling-off period, disclosure on repayments if more than 1 loan is taken out, and restrictions on offering a new loan if an existing loan has just been repaid.Footnote 14 Similarly, the goal of the federal small-dollar loans program in the U.S. is to “enable insured institutions to better assist an underserved and potentially profitable market, while helping consumers avoid, or transition away from, reliance on high-cost debt.”Footnote 15
Currently in Canada, there are affordable small-credit financial products offered by provincial or community-based banks and credit unions that actively reduce barriers to access for consumers.
These include, for example, loans available at the provincial level in British Columbia for amounts ranging from $100–$2,500 with no credit check needed, or loan products and microloans offered by consumer advocacy groups for new immigrants, refugees, and women. While these initiatives show promise, their current availability on only a provincial or local scale prevents large groups of Canadians from accessing them.
Provincial affordable credit alternatives
Programs such as Vancity Credit Union's Fair & Fast Loan and Connect First Credit Union's Cash Crunch Loan offer small loans with interest rates no higher than 19% APR and repayment terms of up to 24 months, which is significantly less expensive than payday loans.
While further research is needed to determine whether communities with these products see a reduction in the use of high-cost credit services, early results from international jurisdictions are promising, and the positive impact of improved access to mainstream banking and credit unions, including small-credit products and overdraft protection, warrants further examination. A U.S. federal reserve reportFootnote 16 shows that subprime borrowers are using small-dollar loans from banks, which are estimated to cost at least 15 times less than payday loans. An independent report in the U.K. notes that borrowers there also reported few repayment issues.
In addition to the availability of alternative (lower cost) products, interventions that are tailored to meet the circumstances of vulnerable consumers can have a significant effect on those consumers’ financial choices. Behavioural insights suggest that consumers’ financial decisions are often influenced by contextual factors, such as the ease of access to credit and the way product information is presented.
Call to action
Integrating behavioural interventions, such as simplifying disclosures or creating alternative credit options that encourage better financial outcomes, can work alongside efforts to enhance financial consumer protection and literacy for payday loan users.
Conclusions
Payday loans are marketed as “filling a need” by providing people with quick access to small amounts of cash with minimal barriers to acquisition. However, the nature of payday loans, with their high rates of interest and unclear fee structures, can lead to chronic borrowing and leave borrowers trapped in a “debt cycle” where an increasing portion of a borrower’s income is required to finance their debts.
This report presents research that supports the notion of a debt-cycle, and reinforces this notion with recent FCAC data from 2 separate surveys. The report supports Canada’s National Financial Literacy Strategy by providing consumers with information on payday loans and debt cycles, and by outlining steps being taken by other jurisdictions that have seen a need to find sustainable solutions on affordable credit for consumers.
Federal initiatives aimed at curbing the influence of predatory high-cost lending mark an important step forward, but broader financial inclusion remains essential. Expanding access to mainstream banking and credit unions, particularly through small-credit products and overdraft protection, could serve as a meaningful alternative to payday loans. This report supports the need for a coordinated, ecosystem-approach to consumer protection and financial inclusion.
By addressing the systemic challenges created by payday loan products through coordinated, evidence-based policy commitments, regulators and policymakers can protect vulnerable consumers from cycles of debt, and foster a more inclusive and resilient financial ecosystem in Canada.