Interest rates of 800 per cent a year are hard to comprehend.
We're in a low interest rate environment — HSBC just rolled out what it said was the lowest interest rate in 50 years, of 3.85 per cent.
But there's a segment of the population that gets no benefit of that and are still routinely borrowing money with interest rates of 500 per cent or more every year. They're the people who have to resort to taking loans from payday lenders.
These lenders operate on the promise of a few hundred dollars to "tide you over" until next payday. They say they have to charge rates that would seem exorbitant elsewhere because the loan terms are so short.
But at rates so high, it doesn't take long for the borrowing to get seriously out of control — and these are the people who have the least capacity to deal with that.