At least one horse in every race…

Terrapin has been digging into the topic of payday loans lately. Our inquiry is yielding a range of interesting and often contradictory findings. We’ll have more to say about this in the near future. For now, here’s a great piece from Freakonomics Podcast based on the the US experience with payday loans. On thing to keep in mind — in the USA, the payday lending industry is approaching $40B. The Canadian industry is estimated to be closer to a $5B – $7B industry. Another detail worth mentioning — the growth in payday lending exploded after 2008 when consumer credit regulations were tightened.

A colleague of ours who runs a large community service charity in a major Canadian city was approached at Christmas time by the local payday lender association with the offer of a substantial charitable contribution. Our friend felt they must turn the gift down as so many of their clients are in a debt spiral with payday lenders. To which the donor replied “…you realize there is a market for payday loans.” This story has stayed with me as I consider the challenges many Canadians face in managing credit in the current context.