Payday Loan Issue Won't Be Solved by Education Alone


October 25, 2016

HAMILTON – Cardus welcomes a report by the Financial Consumer Agency of Canada (FCAC) calling for better consumer education about payday loan costs. The issue is especially important given that the FCAC found Canadian households’ use of these high-cost loans doubled between 2009 and 2014. However, consumer education alone will not solve the issue.

“The FCAC’s focus on educating Canadian consumers about payday loan costs is laudable,” says Brian Dijkema, Cardus Program Director of Work and Economics. “But that will make a limited difference since many payday loan users are in desperate situations and financial alternatives simply aren’t available to them.”.

The Cardus report Banking on the Margins shows practical measures can help consumers:

  • Reforming the payday loan industry. Colorado passed a law in 2010 that required all loans to be repayable over at least six months, established a new fee structure, and provided consumers the ability to pay back loans early without penalty. With more-affordable payments, borrowers’ risk of falling into a cycle of repeat borrowing is significantly reduced.
  • Municipalities can freely promote and encourage low-cost microfinance alternatives that are often available through community organizations.
  • Governments, community foundations, churches, or charitable organizations could help decrease the risk for financial institutions to make small-dollar loans available by offering funds to backstop loan losses or by providing market-based incentives for new alternatives.

While there is no silver bullet for the problems associated with payday loans, there are ways to help consumers. Action and collaboration among governments, banks, credit unions, and community groups would go a long way toward developing new and innovative small-dollar credit products.

To arrange an interview with Brian Dijkema, contact Daniel Proussalidis, Director of Communications.


About Cardus

Cardus is a think tank dedicated to the renewal of North American social architecture. It conducts independent and original research, produces several periodicals, and regularly stages events with Senior Fellows and interested constituents across Canada and the U.S. To learn more, visit: and follow us on Twitter @cardusca.

Daniel Proussalidis
Cardus - Director of Communications
613.241.4500 x.508


Cardus is a non-partisan think tank dedicated to clarifying and strengthening, through research and dialogue, the ways in which society's institutions can work together for the common good.