There is no doubt that new rules have significantly changed the payday loan industry in Alberta. The changes have increased the importance of alternative options for short-term credit, such as products now offered by ATB and First Calgary Financial.
However, it is incorrect to assume that the supply of credit provided by these options needs to meet the demand for short-term credit prior to the payday lending regulation changes. It is also unreasonable to assume that the new rules will result in a rise of online borrowing. Research by the Pew Charitable Trusts demonstrates that tighter payday lending rules does not lead to a substantial increase in borrowing from unregulated online payday lenders. People often just borrow less when high cost credit is less available.
The risk of payday loans and other forms of high cost credit, such as rent-to-own and title loans, demonstrate the need for both affordable alternatives and rules to ensure more responsible lending practices.
The above is an unpublished letter to the editor regarding Stricter rules force closure of payday lending stores (Calgary Herald).