It's where you go when you need fast cash, but if you've ever had to use a payday loan, you know there's nothing cheap about it.
That's why the Manitoba Public Utilities Board was assigned by the province to set a fair rate for lenders. The PUB has ruled a 17 per cent charge for loans up to $500 is fair. That charge drops to six per cent for people on social assistance.
A payday loan is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday.
Byron Williams is the director of the Public Interest Law Centre. He says customers of payday loans will see a big difference in what they will have to pay back.
"Many of them will benefit with savings from between 20 per cent and 50 per cent," he told CTV News.
He says the rates will still be high, but it will be a big improvement to what's being charged now.
The Pay Day Loans Association disagrees.
CTV News spoke to its president, Stan Keyes, who says Manitoba got it wrong. He says he's very disappointed in the ruling and says it will actually hurt the customers it's supposed to protect.
The association says the industry is proven to be high risk. Only 80 percent of people pay back their loans on time and in full. They say forcing them to reduce their profits will only send small and medium size companies out of the province, leaving Manitobans in need with no where else to turn. They believe lenders should be able to charge between 20 and 23 per cent interest rates.
Pay day loan companies have become more popular in less affluent parts of the city, filling in a void left when major banks closed several locations in the areas.
Almost two million Canadians use payday loans companies each year.
