Many of the payday loan users surveyed indicated that they rarely sought financial advice even when they felt it was necessary. As such, FCAC recommends that consumers seek the assistance of qualified professionals to explore options when choosing financial products and, for those having difficulty paying off a payday loan, to get help in developing a plan to repay what is owed.
6. Next steps
By choosing payday loans, many financial consumers are not serving their long-term best interests. Our research offers insight into who these borrowers are and what drives their decisions. Building on these findings, FCAC will focus on the following initiatives to improve the financial well-being of Canadians.
FCAC will adapt its existing consumer education materials and develop new materials to address the gaps identified through this research. Our goal is to help Canadians make more informed borrowing decisions and to seek appropriate assistance as required.
FCAC’s consumer education resources will focus on: (1) fostering consumer understanding of the costs of payday loans relative to existing alternatives, and (2) ways to reduce dependence on payday loans, particularly by paying down debts and ending recurrent debt cycles. FCAC resources will focus on the following themes:
Cost of credit:
Many payday loan users may not realize that payday loans are one of the most expensive ways to borrow money. Some may be confused when borrowing costs are not expressed in the same manner for all credit options. Others may be unaware about the costs of alternatives such as bank overdraft, lines of credit or cash advances on credit cards. Still others may have exhausted their credit elsewhere and feel they have no option other than payday lenders. Equipping consumers to make apples-to-apples comparisons between credit products available to them can empower them to make better credit choices.
Emergency savings:
Every year, a large proportion of Canadians face an unplanned emergency expense-and many need a loan to cover such costs. Their best protection is an emergency savings fund that 
they are willing to use. Some consumers may feel saving for a rainy day is impractical. Others ount. Savings as low as $5-$10 per week can alleviate the need for a payday loan in the future. Many resources exist to assist consumers in establishing such a fund. FCAC resources, for example, include practical tools to get started with budgeting, and advice on how to develop an emergency fund such as starting small, making it a weekly habit, or automating your savings.
Seeking advice:
FCAC recommends that consumers inform themselves and seek the assistance of qualified professionals to explore options when choosing financial products. For consumers having difficulty paying off high-cost loans, FCAC has extensive education material on debt management and budgeting. This includes tools and practical guidance on seeking the assistance of financial advisors, credit counselling services, licensed insolvency trustees and community resources that can help consumers who are struggling to make ends meet.
6.2. Working with provinces and territories
FCAC will continue to work with provinces and territories to contribute to a coordinated, pan-Canadian approach to informing consumers about the costs of, and alternatives to, payday loans. This survey’s findings may also help inform the work of provincial and territorial governments, researchers, etc.
Related FCAC web resources
- Payday loans
- Emergency fund infographic
- Budgeting
- Debt management
- Working with a financial planner or advisor
- Infographic – Payday loans: market trends
?In 2014, 4.3 percent of Canadians reported the use of a payday loan in their household in the previous year, in comparison with 1.9 percent in 2009. FCAC calculations of the 2009 and 2014 Canadian Financial Capability Survey data, available through Statistics Canada.