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Living Bankless

The CBC had an interesting article about the growing number of Bankless Americans. One in twelve families do not deal with banks in the U.S., but a lot of it may be the same reason folks on welfare in Canada can’t cash their cheques: the Banks do not want their business.

In Canada, one of the most significant issues is Banks refusing to open bank accounts for people with no fixed address, who usually live on government assistance. These folks cannot cash their cheques at the bank (and maybe put some money in a bank account, or worse, cannot afford $20 a month to leave money in their account), so they have to go to Cheque Cashing places, which charge usury fees to cash the cheque! These places are the modern-day equivalent of the Loan Shark (in my opinion).

Banks are a funny business in that they can actually turn away customers yet still have obscene profits (remember the best way to make income from a bank is to buy their stock).

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Payday Loans: No, no, no!

As most of my regular readers know, I tend to get a twitch and rant loudly when talking about payday loans and the places that give out this “alternate credit vehicle” (a term used by the industry). I have pontificated about this point many times, but now Stats Canada has put out a study about the growth of this financial alternative, and also who uses it. Perspectives on Labour and Income (2015 last updated) examines this whole industry in detail, but Stats Canada has put up a good summary on their web site about it.

Payday Loans
Pay Day Loans Just Like the Great White, A Perfect Eating Machine

Three percent (3%) of families in Canada have admitted to using these kind of services in the past 3 years. The family’s main bread winner is typically between 35 and 44, which is also interesting (non baby boomers, more like Generation X’ers).

This quote makes me feel very sad:

Almost half of families who used payday loans reported that they had no one to turn to if they faced financial difficulty, significantly higher than for non-users (32%). More than one-quarter reported that they could not handle an unforeseen expenditure of $500, almost four times the rate for non-users. Nearly half could not handle one of $5,000 (17% for non-users).

Yikes, that really does mean we are living a little too close to the ragged edge these days and really need to think about how we spend our money.

I am not condemning you for using this service, but I do want you to think about how you can stop using these services. There are many different ideas out there on many different blogs and books you can get from your library, so please start a plan. Don’t feel like this is your only way to deal with this, because these Loan Sharks are not the answer to your financial survival, if anything they are the end of your survival, there is little chance of escape from these sharks. If you are paying 470% interest, your chances of getting out from under this is not likely.

Payday Loans, Rick Mercer ?

Rick Mercer’s Opinion on Payday Loan Places

Epilogue

Things are getting worse as you can read in this report by Hoyes/Michalos about PayDay Loan impacts on insolvency.

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Pay Day Loan Industry in Canada Being Legislated

Well, this is a good thing to see, it seems the Pay Day Loan folks are about to be regulated by the Federal and Provincial governments in Canada, and all I can say, is FINALLY! This will allow the Provincial Governments to set Short Term interest rates, FINALLY! Evidently the usury that the Pay Day Loan folks can charge can be up to and include 1000% (yes 10 times 100%), amazing.

Folks, let me rant for a second, do not use these services, it is such a slippery slope, and once you are in these folks clutches, you have to work MIGHTY hard to get out from under.

A good one from the Government!

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Tips for Pay Day Loan Places

Again, an interesting article went by and I just needed to see the title to feel the need to say something about what you should do when you feel you need a Pay Day Loan:

  1. Hit yourself in the head with a 2.5 lb sledge hammer above the left ear (not too hard, unless you think you can get workman’s compensation for it).
  2. Go in and ask them, if you can work for them, and if they say yes, then ask for an advance on your first pay cheque, they might only charge you 1.7% a day, seeing as you are a new employee.
  3. Drop by your parents house and hit them up for a loan, and tell them that for every $100 they loan you, you will pay back on pay day, and will cut their lawn, do their dishes and/or clean out their gutters. If your parents aren’t in town, try this on a friend, you never know.
  4. Offer to never talk to a person who really dislikes you if they loan you the money you need. I know there are a bunch of people I wish would do this.

Yes, I am just pulling your leg here (or bashing you in the back of the head with a 2.5 lb. sledge as it were), my message is:

  1. Don’t use these services
  2. Don’t get yourself into a state where you need these services
  3. Don’t use these services
  4. All of the above

Sorry folks, these guys charge more than loan sharks, and in fact, loan sharks are buying into these businesses, because they make more money that way.

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