You can’t watch television anymore without seeing multiple commercials for payday loan companies. They are as bright and jingly as fast food commercials. To hear the commercial personality speak, a payday loan is just another tool in your financial toolkit.

Here on Alberta Avenue alone, there are more than a dozen of these companies, some strictly dealing with short-term credit, while others have a pawn shop as an added service. If coming into a store is not appealing or easy, a loan can be as far away as the click of a mouse.

The industry has been the subject of much legal scrutiny and debate, and just this past August Bill 15, the Act to End Predatory Lending, passed. This bill would reduce the amount of fees for a payday loan from $23 per $100 borrowed to $15, the lowest in Canada. As well, under this legislation, customers would have 42 days to pay off their loan before interest starts compounding rather than 30 days, and customers can pay in installments instead of paying in full. Customers would also no longer be allowed to take out a loan if there is an outstanding loan already on the books. All of this was designed to help consumers get out of the debt cycle.

According to Equifax, the average Edmontonian has a little over $26,000 in debt. Then take into account those who get short-term loans often don’t have the option of traditional banking due to poor credit or usually struggle with low-income.

I worked in the industry, and many times when dealing with customers who were going to default on their loans because of other expenses, we were told to advise them to pay their loan first and then borrow more for the other expenses. You want to keep your customers coming back again and again. Every business does, that’s the nature of commercial enterprise. No business can survive without repeat patronage.

One customer would tell me she had loans out at two different companies. She would pay the first company, then borrow her maximum to come to us to pay her loan and re-borrow to have money for the next two weeks. She did this for years.

The average customer will borrow between $300-$500 per payday, with the maximum loan allowed being $1,500. Even with the new lower fee rates, that still comes out to $90-$150 every month, just in loan fees.

To be fair, if used correctly, payday loans can serve a purpose. If an unexpected expense comes up and credit cards or borrowing from friends and family is not an option, then a payday loan might be the only solution available.

But in order to keep yourself out of the debt cycle, the vitally important thing to remember is to not re-borrow. To understand that the next two weeks or so until payday will be financially tight, but that there is a light at the end of the tunnel. In this way you can access the needed funds and still remain financially independent.