Ontario is home to more than 800 payday storefronts — more than half of those in the entire country. Many of these outlets charge customers up to 500 per cent in annualized interest rates. At such high rates, what drives low-income workers to turn to high interest financial services such as payday loans?
This paper analyzes findings from a survey by ACORN Canada of a sampling of its membership to understand why they turn to alternative financial services such as high interest payday loans.
The survey finds that the majority of the 268 respondents turn to high interest financial services such as payday loans as a last resort because they are denied adequate credit services from traditional banks.