| Comparing the cost of a $300 loan taken for 14 days1 |
||||
|---|---|---|---|---|
Payday loan |
Cash advance on credit card |
Overdraft protection on bank account |
Borrowing from line of credit |
|
$ |
||||
| Interest | … |
2.13 |
2.42 |
1.15 |
| Applicable fees | 50.00 |
2.00 |
...2 |
… |
| Total cost of loan | 50.00 |
4.13 |
2.42 |
1.15 |
% per year |
||||
| Loan cost as a percentage of amount borrowed3 |
435 |
36 |
21 |
10 |
1 Costs and fees are for illustration only. |
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2 Monthly service packages often include overdraft protection. |
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3 Estimated annual cost calculated by adding all fees, charges
and interest charged after 14 days and projecting this over a one-year period. |
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| Source: Financial Consumer Agency of Canada, The Cost of Payday Loans, p.11 | ||||