Payday Loans Blog

Initial approval was given yesterday in South Carolina's Senate for a bill that would ultimately kill the payday loans industry.  The Senate subcommitee passed a bill, with a 4-3 vote, that would limit payday loans to 25 percent of the customer's gross income.  The bill would also require a seven-day waiting period between loans.  

The limit based on the borrower's income would basically disqualify the lower income costumers from getting a payday loan, which is a short term, high interest loan.  A similar bill was passed in the Senate last year that was very similar to the recent bill.  The House later killed that bill. 

Jamie Fulmer, a spokesman for the payday lending company, Advance America, stated his feelings regarding the passing of such a bill.  He said, "I think it will make it very difficult for any operator to continue operating in South Carolina."

There have already been several legislative measures to limit or restrict how payday loan companies operate.  Now, some in the Senate want to pass legislation that would require even more regulations and make it very difficult for any payday loan company to survive. 

Concerning more stict legislation, John Ruoff, research director for South Carolina Fairshare, stated, "We think this is a real strong approach.  If you're not going to ban them, then you have to regulate them heavily."  The very obvious problem with that comment is that, by "heavily" regulating the industry, to the extent that they are trying to, the industry won't need regulation for long, because it will die. 

The only thing a bill like this will do is eliminate hundreds of jobs and taking consumer freedom away from citizens.  Payday loans are available to those who want or need them.  Taking that option away is just limiting choice.  Regulations are already in place to protect some consumer rights.  Consumer advocates should be satisfied and payday loans should continue to be an option to those who need them.  

Lawmakers in Kentucky have passed a bill that would put a moratorium on new payday lenders and create a state database of all payday loans. Kentucky's Governor still has yet to weigh in on the bill, as spokesmen say he is still studying the bill before making a decision.

Interestingly, the bill started out as merely creating a statewide databse of all payday loans. Current law in Kentucky states that borrowers can only have a maximum of two loans out at once for a maximum of $500 each. But there has been no way to enforce the bill.

Yet somehow some "mysterious force," as on representative put it, asked for the 10 year moratorium. Further investigation shows that Bill Strong, R-Hazard, asked for the moratorium as a way to protect consumers.

Oh yeah, and Strong is married to a woman who just happens to own and operate her own payday lending business. What better way to help your business than to prevent competition from springing up for the next 10 years? Nothing shady there...

The statewide database is similar to other provisions in other states. Legislators say is is a consumer protection bill, believing that they are helping people by limiting their freedom and keeping track of their personal financial transactions.

Why so little faith in the people of Kentucky? Are people unable to moderate their own borrowing? Do lawmakers truly feel that restricting freedom is the best way to protect people? Ben Franklin said that anyone who trades freedom for protection deserves neither.

I'll tell you what, let's do an experiment. Let's put all these payday lending laws to a vote. But not your regular vote. We'll leave out anyone who has never needed to get a loan. They clearly would only vote to protect other people.

Let's let borrowers of payday loans decide how much protection they want from themselves. Guarantee you that bill goes down burning. So why do lawmakers feel compelled to protect responsible borrowers when so many have demonstrated the ability to borrow responsibly?

Payday loans need no regulations. The only thing we need protection from is our ever encroaching government.

Legislation that would put restrictions on payday loans in South Carolina is advancing in the State Senate. A Senate subcommitte approved a bill that would put new limits on lenders and borrowers.

The first provision calls for a "cooling off" period. Borrowers will not be allowed to get another payday loan for seven days. The idea is that borrowers will not use one payday loan to simply pay off another, thus perpetuating a debt cycle.

The second provision of the bill would restrict loan amounts to $600 or 25% of a borrowers monthly income, whichever is lower. The idea here is people will not be allowed to borrow more than they are able to pay back.

It seems that lawmakers in South Carolina have good intentions, but they are way off the mark. It simply is not the role of government to protect people from themselves.

There's a lot of knives in my kitches with potential to do me great harm when not used properly, but it's silly to put restrictions on kitchen knives. How about baseball bats, weight sets, gardening tools and the lottery? All of these things serve a purpose, all of them can be used properly. Likewise, all of them can be misused and cause great harm. But we're not banning them.

Payday loans are no different. Yes, it is a bad idea to borrow more than you can possibly pay back. But it is not the role of government to dictate to us what is and what isn't too much for us to borrow. It is our responsibility to educate ourselves on our options and make an informed decision.

Now if I live in South Carolina and I don't get paid until Friday, yet my car needs fixed today for $1,200, I'm out of luck. Unless I'm lucky and just have $1,200 sitting around. So not only can I no longer get to work to make money, I can't do anything to get my car fixed until I get paid.

If the government wants to stop people from getting hurt, they shouldn't sting the lenders, they should sting the borrowers. There's literally a dozen or more responsible borrowers using payday loans correctly for every irresponsible borrower who isn't.

So turn the irresponsible borrowers into responsible ones and problem solved. The government should be here to educate and inform, not dictate to us what is best for us. If foolish people want to do foolish things, no laws on earth will stop them. They will always find a way.

Don't punish responsible borrowers for the foolish actions of the irresponsible borrowers. Shame on you South Carolina, you should know better. Don't let this payday loans bill pass.

Idaho lawmakers are considering two bills that could further regulate payday loans in the state. While there are 239 licensed payday lenders in the state, thousands of others operate online without being licensed in the state. The new bills could change that.

Each state has different regulations regarding payday loans. Some states have banned them outright, while others have more lenient laws. The strategy of some online payday lenders is to operate in a state with more lenient laws. Then when someone in another state applies for a payday loan online, they use their own state's lenient laws when processing the loan.

Idaho lawmakers are taking up the bills that could end this practice in Idaho. The bill would first put a cease and desist order on all payday lenders, store front or online, not licensed by the state. Secondly, it would give the the state the right to declare loans from unlicensed lenders as invalid. Thus borrowers would not be required to pay back the loan.

The bill would also require lenders to offer credit and debt counseling services to borrowers, as well as offer an optional payment plan for borrowers who cannot repay the loan. Essentially the bill would require lenders to license with the state or stop lending online to residents of Idaho.

Check City offers payday loans online, including in Idaho, where we are licensed to do so. We will have to wait and see what happens in the Idaho legislature with this issue. It could be that anyone who wants to offer payday loans in Idaho may soon have to be licensed to do so.

The Deseret News and KSL reported last week that a recent bill to cap payday loan rates was defeated by an 8-4 vote.  The bill proposed a rate cap of 100 percent annual interest to all payday loans.  

Rep. Laura Black, D-Salt Lake, was the one to sponsor the bill stating that too many people are unable to pay for high interest loans.  Her main argument is that people take out loans, but are unable to pay them back (due to the high interest), so they take out more loans to pay for the original one, leading to more debt.  Let's remember that, on average, the interest for a $100 loan is $20.  It's hard to believe that a person who took out a loan for $100 is unable to pay the interest of $20.  Payday loan companies work with the borrower and allow for monthly payments.  Saying that payday loans make borrowers go into more and more debt is ridiculous. 

Payday loan consumers are told in advance what the interest will be.  The guidelines of the loan is presented to them and explanations are given.  The consumer is able to make an educated decision, based on their circumstance to either take out a payday loan or not.

In many cases, payday loans charge less compared to fee for bounced checks.  If payday loans were to be eliminated all together, it would be challenging for those without credit to get any kind of a loan.  This bill to limit rates to 100% would put payday loan companies out of business.  Luckily, the commitee voted down the bill without much argument or debate.  Most payday loan companies, including Check City, encourage customers to be responsible borrowers.

The Washington House has passed a bill that would further regulate payday loans. The earlier version of the bill had limits on the amount of interest payday lenders could charge, but thankfully those provisions were removed.

The bill essentially does two things. First, lenders are required to allow borrowers to enter into extended repayment plans. Second, borrowers will be limited to borrowing loans totally no more than 30% of their monthly income.

At Check City, we are against government regulation of the payday loan industry. Free markets always have and always will regulate themselves. For example, if a lender does not allow extended repayment plans and charges much higher APR than another lender, which one will do more business?

Competition in this industry is very tough, and lenders will do what they need to in order to survive. It is not in a lenders best interest to harm borrowers in any way. If left unregulated, lenders would compete against each other for business, thus making the borrowers the winners in the end.

We do applaud the House for removing the provisions that would limit interest rates on payday loans. Lawmakers pushing to cap interest rates simply have no understanding of how APR works or are getting a big payoff from an anti payday loan organization.

The truth is that we simply cannot understand why in times of economic hardship the government is trying to put an entire industry out of business at all. Payday lenders operate thousands of store fronts across the country and employ thousands of people. Take them away and you will have more unemployed workers, which is the last thing this country needs.

Those lenders like Check City who follow the best practices guidelines for payday lending are not harming consumers. Those lenders who do take advantage of people do not need to be regulated out of business; people will simply stop using them and go to those lenders who won't take advantage of them.

We encourage all legislators and lawmakers to carefully research the payday lending industry before making rash decision about regulating payday loans and instantly eliminating access to short-term credit and thousands of jobs.

You may have heard some negative things about payday loans in the news recently.  Regardless of whether you have or haven't, you should listen up to this, because it should probably set you straight when it comes to this topic.  Here's the truth.

When people walk in to apply for a payday loan, it is because they are looking to get some extra money that they don't have at the moment.  Perhaps they have some sort of bill that they need to pay off before it becomes overdue.  So maybe they need a payday loan so they don't overdraft on their bank account.  The people looking for these loans are people that are a little down on their luck and need a boost to keep them on their feet financially.

The lenders for payday loans don't prey on anybody.  Nobody is being forced to go in and get a loan.  But if they really need one, which sometimes happens, they are there to help out.  The employees at Check City are especially caring and helpful.  They will make sure that a person will be able to pay off the loan before they give one to them.

People usually think these loans are bad because of their interest rate.  As with most loans, payday loans are calculated with APR, or annual percentage rating.  But since these loans are only taken out for two weeks, their interest rate appears high.  You should realize though that the actual interest will not be very high after just two weeks.  An average payday loan comes out to be a little over one dollar per day for every $100 borrowed.

People think this type of loan is evil because they aren't responsible enough to use it wisely.  When you go into Check City, make sure to use your payday loan responsibly.

Yesterday I mentioned the advantages to having a prepaid Visa card.  In the same light, a prepaid phone card can be a great benefit to many individuals.

A prepaid phone card can be used pretty much anywhere you want it to.  One of the perks of getting your prepaid phone card from Check City, is that you can choose your card based on where you call most often, how often you call, and what time of day you call.  All of these factors play a role in choosing the best card for your needs.  Check City staff memebers are very helpful and knowledgeable aobut phone cards.  They can walk you through the process and show you your options. 

Going on a trip or visiting a country where cell phones or land lines are not readily available (for a reasonable price), creates some challenges to being able to have contact with family members or friends.  By purchasing a prepaid phone card before a short trip or extended vacation, you can avoid being bullied into a card that is just not the quality card you want.  

It has become increasingly easier to stay in contact with family and friends over long distances.  It is not, however, always cheap to do so.  A prepaid phone card is a quick and easy service that can allow you to stay in touch with those you love at a relatively inexpensive way.  To get a Check City prepaid phone card, you can visit any of our conveniently located store and talk to a friendly staff member. 

Finding the right method of payment these days can be difficult.  But, A prepaid Visa card is one great method of payment that is quick and easy.  

 A huge perk to getting a prepaid Visa card is that you don't have to undergo a credit check or open a bank account.  The service is there for your convenience.  Check City provides these services, which give you all the advantages and benefits of a traditional Visa card.

A prepaid Visa card from Check City can provide a variety of options.  Some of these options are:

• Use your card anywhere Visa is accepted--worldwide! 
  
• Take advantage of easy loading options.  Check City makes it easy to add funds to your card.  You can either transfer the money from your bank account or bring cash to any Check City store.
• Pay your bills.  Like a debit or credit card, prepaid cards allow you to pay bills online or over the phone.
• Manage your money.  Each card comes with account management tools and free money transfers to help you be more effective in managing your money.
• Spend Smart.  The major different between a prepaid Visa card and a credit card is that a prepaid card won't force you into debt!
• Stay informed.  Your prepaid card offers account alerts that will send you information about each transaction you perform.  It will send these alerts to your email or cell phone.

Using data gathered between the years of 1990 and 2006, a study was conducted by Petru S. Stoianovici of The Brattle Group and Michael T. Maloney, PhD of Clemson University, to determine if there was a direct correlation between individuals who take out payday loans and those who file for bankruptcy.  The study, called, "Restriction on Credit: A Public Policy Analysis of Payday Lending," found "no empirical evidence that payday lending leads to more bankruptcy filings," and also create doubt on the apparent "cycle of debt" argument that many of the industry's critics site.

Three of the several basic findings were: 1. Payday lending does not lead to more bankruptcy filings, 2. The "cyctle of debt" argument against payday lending is not supported by evidence, and 3. Restricting payday loans harms consumer welfare, reduces access, increases cost. 

A lot of the current and past legislation that has been passed in favor of higher restrictions or elimination of the payday loan industry rests on the fact that payday loans do contribute to bankruptcy and a "cycle of debt".  But, according to this study's findings, those arguments are unwarranted and flat out incorrect.

An excerpt from the study states, "There is no statistical evidence to support the 'cycle of debt' argument often used in passing legislation agains payday lending...It is hard to make a principled argument that the consumer is deceived in a payday lending contract because it is very simple in terms of the cost and structure: there are no hidden costs."

This study very clearly indicates that the issues a lot of the payday lending industry's opponents have are not founded on facts or legitimate arguments.  Payday loans provide a helpful and trustworthy service for those needing it.  This study shows that critics have been presenting unfounded accusations agains payday loans.  Statistically proven, payday loans do not negatively affect consumers.