For individuals turning to payday loans, the province has announced a reduced borrowing rate that will help reduce the interest rate and fees starting August 1.

The cost of borrowing has been reduced from $23 for every $100 borrowed to $15 per $100, with all related fees being included in this cost which puts an end to hidden fees and charges.

This is the first phase in the Alberta governments Act to End Predatory Lending legislation, with more changes taking effect before the end of the year.

“Last fall, Albertans told us they want lower interest rates and stronger consumer protections," said Stephanie McLean, Minister, Service Alberta. "Today, it’s the law. We have put an end to 600 per cent predatory interest rates and vicious cycles of debt, with fair rules that protect Albertans.”

Payday lenders will no longer be able to charge a fee to cash a payday loan cheque, solicit directly by email or phone, or offer a loan when another is outstanding.

The Act also requires the government to encourage financial institutions to offer alternative short-term loans that are reasonable and accessible to all Albertans.

The first micro-loan that has been presented is through First Calgary Financial and Chinook Financial who are offering an annual interest rate of 19 per cent with a payback period of six to 18 months.

The cost of borrowing $100 over two weeks at 19 per cent annual interest is 73 cents, compared to payday loans $15 per $100.

“I am so pleased First Calgary Financial will launch its Cash Crunch loan on August 22. It’s credit with reasonable rates, longer payback terms and financial literacy supports that set Albertans up for financial health, not ruin,” said McLean.

By reduced the cost of borrowing, the government is hopeful that it will save people hundreds of dollars in debt repayments that are already struggling with low income levels.