New payday loan protections and lower rates for Albertans

Alberta now has the lowest payday lending rate in Canada.

As of August 1, the province has the lowest maximum borrowing rate in the country, reduced from $23 for every $100 borrowed to $15 per $100. All fees related to a payday loan must be included in this cost, and this move puts an end to hidden fees and charges.

These changes are part of the first phase of An Act to End Predatory Lending legislation that came into effect on August 1. More changes will take effect later this year.

“Last fall, Albertans told us they want lower interest rates and stronger consumer protections. Today, it’s the law. We have put an end to 600 per cent predatory interest rates and vicious cycles of debt, with fair rules that protect Albertans.”

Stephanie McLean, Minister, Service Alberta

“I applaud the provincial government for taking bold action to end predatory lending practices in Alberta. It’s a critical step that supports our local efforts to reduce poverty in Lethbridge and prevent citizens from falling into a crushing cycle of debt.”

Chris Spearman, Mayor, City of Lethbridge

Payday lenders will no longer be able to charge a fee to cash a payday loan cheque, solicit directly by email or phone, or offer a loan when another is outstanding.

The Act also requires government to encourage financial institutions and community groups to offer alternative, short-term loans that are fair and accessible.

First Calgary Financial and Chinook Financial are the first to launch an alternative microloan program in Alberta. It has an annual interest rate of 19 per cent with a payback period of six to 18 months. The cost over two weeks for a borrower at 19 per cent annual interest is 73 cents per $100 borrowed.

“I am so pleased First Calgary Financial will launch its Cash Crunch loan on August 22. It’s credit with reasonable rates, longer payback terms and financial literacy supports that set Albertans up for financial health, not ruin.”

Stephanie McLean, Minister, Service Alberta

“Today, Alberta is taking positive steps forward to help Alberta’s financially vulnerable citizens. Our two divisions, First Calgary Financial and Chinook Financial, are proud to introduce fair and responsible small-loan alternatives. Our Cash Crunch Loan will be the first of its kind in the province and will prevent people from reaching financial instability.”

Shelley Vandenberg, President, First Calgary Financial

“The reduced cost of borrowing will save people living on a low income hundreds of dollars in debt payments. The Cash Crunch loan is also a great opportunity for people to reduce their debt and build a positive relationship with their lender. We are grateful to the Government of Alberta and First Calgary Financial for their important work on this issue.”

Jeff Loomis, Executive Director, Momentum

“Alberta’s payday lending legislation is a welcome addition to our poverty reduction strategy. With dramatically reduced interest rates and more time to pay back loans, Albertans will keep more of their hard-earned money. And we support more banking options designed for the needs of the working poor in Alberta.”

Franco Savoia, Executive Director, Vibrant Communities Calgary

“Alberta credit unions are proud to join the provincial government in celebrating these changes and look forward to the positive impact they will have in strengthening consumer protection within the financial services sector in Alberta.”

Graham Wetter, President and CEO of Credit Union Central of Alberta