Credit counsellor calls for stiffer payday loan rules
The New Brunswick government should adopt new rules that prohibit people from cashing their social assistance cheques at payday loan stores, according to a credit counsellor.
Payday loan companies serve as an immediate solution for some people who need money quickly.
But Gordon Arsenault of Credit Counselling Services said he often sees clients stuck with several payday loans, using one to pay off another.
"And the unfortunate thing is, if we're looking at two days or three days, it can be an extremely high cost to them," he said.
Arsenault said he believes more government regulation is needed to stop payday loan companies from dealing with those who can least afford it.
"Actually it's more of a problem than a fix," Arsenault said of social assistance recipients relying on payday loan companies.
The New Brunswick government introduced a law that would set limits on payday loan fees in 2007.
'About a week's less groceries'
Ian Chandler used to get his social assistance cheque in the mail but it often arrived in his box post-dated by a day or two.
A bank wouldn't cash the cheque, but Chandler said payday loan companies would help him out. But using that service came at a cost.
Chandler said the payday loan company gave him $35 less than the value of his cheque.
He admits his social assistance worker warned against going to payday loan stores to get his money early.
"I'd go to Money Mart early and cash it a day early. My worker got really upset at me and said, 'You're taking food out of your cupboards so don't do that no more," he said.
Chandler admits that going to a payday loan company to get his money immediately cost him "about a week’s less groceries."
The temptation of using a payday loan store is now gone for Chandler. He said he now receives his provincial assistance by direct deposit.