B.C. to reduce maximum charge on 'devastating' payday loans
$17 will be maximum allowed borrowing charge for $100 short-term loans come Jan. 1
The British Columbia government is taking steps to cut the interest rates charged on so-called payday loans.
The maximum allowable charge for a payday loan in B.C. will drop from $23 to $17 for every $100 borrowed, starting Jan. 1, 2017.
The Ministry of Public Safety and Solicitor General says the changes mean B.C.'s borrowing rates for the high-cost, short-term loans will be the second-lowest in Canada.
Prior to 2009, charges for payday loans in B.C. were as high as $30 for every $100 borrowed.
The ministry said in a news release that regulators will also consult with credit counsellors, advocacy organizations, loan providers and others as the province seeks improved protection for consumers who rely on payday loans.
The 30-day consultation will examine issues ranging from consumer education and information, to development of innovative lower-cost loans that could shift consumers away from more expensive options.
"I saw for myself the devastating effect these short term, high-interest payday loans have on our communities. This is a positive step towards improving the lives of families and working people," said Maple Ridge councillor and former Maple Ridge food bank chairman, Tyler Shymkiw, in the news release.
Central 1 Credit Union regional director Anna Hardy says she applauds any solutions that prevent borrowers from becoming trapped in a cycle of personal debt, and adds she looks forward to speaking with the province about the issue.