The High Cost of Being Poor In Canada

By Emily Dee

"My daughter is disabled and on the Ontario Disability Support Program. She works 16 hours a week for minimum wage, part of which is deducted from her monthly allowance, so suffice it to say that she is deemed low income.

She is dependable, and has been at her job for three years. During that time she has never been late, with the exception of the odd snowstorm that delayed her bus, and rarely takes a day off.

But this summer I was abruptly introduced to the hidden economy of the working poor, when a young street “punk” moved in on her, and in just two weeks, destroyed years of my daughter’s financial prudence.

And she was able to do this so easily because of something called “payday loans”. I had heard the term before but never really understood the system. I certainly understand it now.

During that time, this young girl (16-years-old) took my daughter to four of these places, where for 21% on the dollar, she could get a cash advance (the longest term 11 days). All she needed was a chequing account and proof that she had a job.

Using one transaction as an example, she was advanced $118.50 in exchange for a post-dated cheque of $ 150.00 (6 days hence). Since roughly 60% of her income goes to rent, she doesn’t have $ 150.00 extra in income, so the cheque bounced.

The bank charged her an NSF fee of $40 and the establishment an NSF fee of $50.00. So the cost to borrow less than $120 dollars for a week was now $240.

I know that the right-wing would automatically denounce the young girl who took advantage of a disabled person, with “soft on crime”, “young offenders”, because after all, she was the one who walked away with the $118.50. But what of the offenders who “legally” netted $121.50? They are no better than the “little criminal”.

In total, this young girl received about $800, and my daughter was left with a debt of almost $2000, because not only did she have exorbitant bank charges, because of returned “payday loans”, but her regular monthly bills, like cable and telephone, also bounced, and these companies charged her on their end as well.

I only became aware of what was happening when my daughter called crying that her employer had messed up her paycheque and she had no money for food. Turns out that she received her pay, but all of it went to cover an overdraft.

How Did This Happen?" (snip) ...

Read the complete article at this website:
http://unseatharper.ca/wordpress/2011/03/the-high-cost-of-being-poor-in-canada/

Also read "The PayDay Loan Trap"
http://moneyjarbudget.com/2009/10/the-payday-loan-trap