A Payday loan cost me double time

payday loan


Payday Loans, Easy Money = Big Problems


We have all run into situations where we need fast, easy money and if you have no access to a financial institution or a credit card where do you go?

While Payday loan companies market their business as a convenient and quick way to get some easy money when you’re in a bind, they do not go into much detail about how hard they can be to repay.

When I was married, money got tight pretty quick when my husband got hurt at work while I was on maternity leave. Bills were falling behind and every week just seemed like a struggle to get through. Money was always on my mind as I was always figuring out how I was going to buy diapers and milk, and pay the phone bill, among everything else. One day my husband suggested a payday loan and looking back now I wish he hadn’t.


Convenience of a payday loan


The Internet makes almost everything easy these days, including getting a loan. If you have online banking and your pay is direct deposited, getting a payday loan online is as easy as filling in an application, stating your personal information, employer and how much money you make.

It’s too easy actually and depending which company you are dealing with and your bank, you may have the money as soon as 30 minutes up to 48 hours after being approved. This money is deposited directly in your bank account.

When things got stressful, I will admit I was not always thinking clearly and this sounded great! Minimal effort was required and it provided a little financial relief which unfortunately didn’t last long.


Payday Loan Costs


These companies even tell you this! Money Mart states right on their application ‘Payday loans are high cost loans’.

Your first loan with any company is usually a small amount, ranging from $60-$300.00 depending which company you are dealing with. After successfully paying back your first loan you are most often eligible for a higher loan amount in the future.

In Canada the cost of borrowing per $100.00 dollars varies across the country.  In Alberta, British Columbia and Saskatchewan every $100.00 borrowed will cost you $23.00. PEI is most expensive at $25, Ontario at $21.00  and Manitoba being the cheapest at $17.00 per $100.00 borrowed.

Being in Ontario, we borrowed $300.00 with the total including the cost of borrowing being $363.00 on a two-week loan period. I quickly rationalized in my head that I would have enough money to pay this back on my next paycheque, which at this time was my maternity pay.


Payday Loan is a continuous cycle


I did have enough to cover the payment as I knew I would, but now I was left with little money to get by for the next two weeks. We went from living paycheque to paycheque to our pay being spent before we even received it. So what did we do then?

We borrowed the money again! This pattern continued for a couple of months. A $300.00 loan ended up costing us over $600.00 by the time we were able to pay it off. We paid more than double the amount we originally borrowed in only a few months. What a waste of money. If only we had a proper budget and were more aware of our spending we could have avoided this altogether.

I remember thinking to myself on many occasions, I really wish my paycheque wasn’t gone already and still a few days or almost a week before payday. It was depressing to think that I was constantly behind.

I wanted my paycheque to be mine again, not going to the payday loan company. It put such a burden on my finances, making it hard to pay some of my other bills and provide for my family.


Saying goodbye to a Payday loan


Paying off a payday loan should be top priority of things to do as it is in your best interest to save your money in the long run. Mr. CBB has many free money saving tools on the blog which you can download that make creating and sticking to a budget easier. Making a budget for yourself may be required to pay off your loan and a great tool to avoid needing a loan in the future.

If you cannot afford to pay the loan back in full without having to re-borrow, try to lower the amount you borrow each time. I got serious about getting rid of this debt and after handing over $363.00 of my paycheque for a $300.00 loan, I only re-borrowed $250.00 with the cost of borrowing making it $302.50, $200 for the next loan and so on. It took some time to pay it off but the amount owing was constantly decreasing while easing the strain on other areas in our budget.

Although it depresses me to look back on how much money we wasted on payday loans, it was a good eye-opener for me. It was also another stark reminder that the need for a budget was crucial.

Creating a budget is the only thing positive that came out of this whole experience. Now being a single mom, my budget helps me stay away from needing a payday loan ever again.

Is the convenience of easy money worth it to you?

katrina cbb

Post Contribution: 

Katrina is regular contributor for Canadian Budget Binder and is as passionate about personal finance as she is gardening. Katrina is a horticulture graduate with over 10 years experience with landscaping and greenhouse production.

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Photo Credit: freedigitalphotos. net



Mr. CBB was born and raised in the United Kingdom who then moved to Canada where he is a permanent resident. He recently became a father to a very busy toddler who allows him to be a kid at heart. He bought his first house at the age of 21 after University and his second at the age of 24. Both Mr.CBB and his wife are Debt and Mortgage Free and they did it all in under 5 years using a Budget. Canadian Budget Binder is a place where he shares their financial experiences with his readers and hopes to learn about theirs. Welcome to CBB!


  1. daisyprairieecothrifter says:

    I had a friend who – no joke – used payday loans to get out of debt from other payday loan companies. It was insane. I tried to help her out of it, but it never worked. She’s probably still in that cycle.

  2. Great post! Those payday loan places are everywhere in the city closest to me. Also they are one of the few places hiring new workers!! It’s so sad, honestly.

  3. Great Jollyhoombah (@Hoombah) says:

    Katrina!!! Thanks for scaring us away from payday loans forever! Life is hard enough without that particular vicious cycle. Have a will-nilly one!!!

  4. Wow, just goes to show how things can spiral out of control! Glad you’re out of the cycle now.

  5. Whoa good information on the pricing, I have always wondered about that fact. Now is the cost paid up front, or is it interest that you are paying back (and if you pay it down more quickly you “save”)?

  6. The seriousness of this cycle can’t be stated enough. I also got into the cycle of taking payday loans to pay off payday loans. Some of them are 75% extra for the charges. Although the interest rates are regulated — there are admin fees, transaction fees, etc.

    It was a scary experience — Even taking less and less didn’t work.

    In the end, it caused me to start a consumer proposal. (Although it was not a simple or easy process.) I wish there were some regulatory bodies to govern some of these companies.

  7. Christine Weadick says:

    Wow !!!! I had heard those things were a mega rip off but you just let me know exactly how bad they are…. I’m hearing on the radio lately of a new company around that does those loans, from England I believe… (Sorry Mr CBB!!!!) these company’s are such bad news and they prey on people in trouble financially. Thank you so much for sharing your story as a warning to us and I’m so glad you were able to get out from under these vultures!!!!! Take care Katrina!!!

  8. Debt RoundUp says:

    Payday loans are dangerous, but I see why people take them out. It is quick access to money, but you certainly pay for it in the end. I have seen many providers that have APR’s as high as 2500%!

  9. Thanks for the honesty Katrina! I think the only time I’d suggest a payday loan would be if you’re going to be on the street the next day. Even then it would be the very last option in my opinion. The rates are just crazy and the never ending cycle just makes it next to impossible to get out of.

  10. I had no idea what was a payday loan. Wow, I will definitely stay away from them.

  11. Thanks for sharing your experience. It’s good to see how you’ve turned it into a positive thing in the end.

  12. hollyatclubthrifty says:

    Thanks for sharing…it happens! I’m glad you learned from it and will stay away from payday loans in the future!

  13. When it comes to payday loans, it is advisable to understand the proper use of payday loans – as solutions for financial problems, and not an easy withdrawal means (like your ATM). It sometimes gets you addicted specially with easy approved loans, and sometimes it makes it less of a last resort type solution – which is something to be careful with.

  14. Thanks for sharing…

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