The Courier-Journal reports that a bill that Kentucky-chartered banks say would make them more competitive with national banks has drawn fire from consumer advocates, who say it would roll back protections against cash loans.

The measure has passed the Senate and cleared the House Banking and Insurance Committee. It awaits a vote in the House.

Senate Bill 45 would make state-chartered banks exempt from any Kentucky laws or regulations that don't apply to national banks. About 45 national banks operate in Kentucky along with about 165 state-chartered banks.

On one hand, the Kentucky Bankers Association says the measure is needed to help state banks compete for second-mortgage loans. The association says national banks have lower costs for those loans because they are exempt from some Kentucky lending restrictions.

"We seek only to level the playing field," Ballard Cassady, president and chief executive officer of the association, told the committee this month.

Cassady said national banks "can ignore the peculiarities of Kentucky's state laws, and our state banks are left at a competitive disadvantage because they cannot." He said federal banking laws offer plenty of consumer protections.
On the other financial hand, consumer advocates, including retiree organization AARP and the state attorney general's office, said the broadly worded measure would affect more than mortgage-loan costs.

They said it would shield banks from Kentucky laws regulating usury and payday loans and from the High Cost Loan Act of 2003, meant to protect consumers against predatory home loans. (more…)

While many other states - through editorials or legislative measures - are trying to ban the use of payday loans, a pending bill in Misssissippi would expand the reach of these cash advances.

Under the propsal, cash loan companies would be able to offer automobile club memberships on top of the loans. During debate over the proposal Thursday, some House members argued it would allow companies that already charge high interest rates to extract more money from Mississippians who can least afford it.

"Make no mistake about it: although it's considered an auto club membership, all it really is, is hidden interest," said Rep. David Norquist, D-Cleveland. "On a $700 loan, a $70 membership is 10 percent of the value of the loan. If it is never used, someone has just paid an additional 10 percent interest."

However, supporters of the bill rejected those arguments, saying people living paycheck to paycheck might need tire changes or other roadside services of an auto club if their vehicles break down.

"They don't drive BMWs, Mercedes, Bentleys. They drive older cars, cars that may break down, have problems," said Rep. Danny Guice, R-Ocean Springs, chairman of the House Banking and Financial Services Committee.

The bill had passed the Senate on Feb. 1. The House passed its own version after a vote of 76-39 on Thursday. Because the House made changes, though, the bill now moves back to the Senate for more work. This is at least the second year lawmakers have considered this proposal.

Bailey said authorizing the sale of auto club memberships will allow insurance companies "to come in and steal legally from our people."

Stay tuned to find out the future of payday advances in this state.

Previoulsly, we asked the question: where will residents of North Carolina go to have their demands for payday loans met? The answer, it seems, is fairly obvious: just a bit south.

With payday loan lending suspended in N.C., consumers are turning their attention to South Carolina. Clover, for instance, is the first town you would encounter if you drove down from Gastonia. With a population of barely more than 4,000, this area already is home to four payday advance operations - and two more are looking for locations.

Payday lending is exploding here and elsewhere along the south side of the state line.

To wit:

– There are now 50 payday stores in York and Lancaster counties, up from 40 in 2004.
– Fort Mill's first payday loan store opened last year.
– On Cherry Road in Rock Hill, there are now 10 payday lending stores in the first 1.3 miles after a southbound driver exits Interstate 77.

Jack Flynn, who owns a payday store on the main street in Clover, says 95 percent of his business are from citizens of North Carolina looking for a cash advance. He plans to open two more stores along the state line this spring.

S.C. law allows payday lenders to charge 15 cents for every dollar borrowed, with loans due in as little as two weeks. That's an APR of 391 percent.

Consumer advocates and N.C. regulators compare the loans to a narcotic - not just bad, but also hard to escape. The Center for Responsible Lending in Durham, a leading critic, says the vast majority of payday loans go to people who already have an outstanding balance on another loan.

"I'm embarrassed for our state," said Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center in Columbia, which advocates for the poor. "We're not only finding a way to prey upon our own citizens but we're finding a way to prey upon citizens across the border."

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It's a growing problem in the world of payday advances: unlicensed lenders. It's led to lawsuits in other states, such as California, and it's now causing an issue in Arkansas.

A new study on payday lending practices in the state says fewer than 25 percent of payday lenders are actually licensed for payday loan approval. Those that are, the report claims abuse state regulations and cost consumers millions.

The study is called Payday Lenders in Arkansas: The Regulated and the Unregulated. It was conducted by a group called Arkansans Against Abusive Payday Lending, a coalition that's seeking to ban such businesses focusing on instant payday loans in the state.

Coalition president H.C. Klein said that, although the Arkansas Constitution limits interest rates on consumer loans to 17 percent annually, some payday lenders specialize triple digit annual interest rate loans.

The research says 275 payday lenders were operating in Arkansas as of February. Of that number, a mere 66 are licensed and regulated by the Arkansas State Board of Collection Agencies. According to the study, 70 others are licensed, but make unregulated payday loans due to the agency's interpretation of state law.

The ongoing Oregon payday loan fight is getting personal, even religious. A Eugene, Ore., pastor spoke with the Daily News and recalled a parishioner who was living on Social Security and became mired in debt after taking out a couple of payday loans.

"I asked if I could come over and look at the paperwork, and I couldn't believe it. She actually had one loan annualized over 1,000 percent. It took my breath away," said Tom Dodd, pastor at United Lutheran Church in Eugene.

Reformers are taking another shot at regulating Oregon's surging payday loan industry — possibly via a citizen-referred ballot measure — and a growing number of citizens say they're using a religious perspective to really drive home the issue.

"We have a strong tradition against usury — the strong taking advantage of the weak. To me, it's really a central example of how power is misused, and the faith community ought to stand with those on the short end," Dodd said.

But lenders say they're being unfairly demonized for providing a service that consumers demand. They point to the low number of consumer complaints — 17 out of 750,000 loans processed in Oregon — as evidence of their value, especially to people whose bad credit and urgent circumstances might otherwise preclude them from quick cash.

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Arkansas payday loan regulations are under attack from a consumer advocacy group that claims loopholes in the state's law cost citizens $68 million per year, according to the Arkansas News Bureau.

"The price of this lax enforcement of the usury protections of the Arkansas Constitution is unfortunately being paid by Arkansas consumers who use payday loans," Hank Klein, president of the Arkansans Against Abusive Payday Lending coalition, said.

The group contends that a 1999 law passed to regulate the payday advance industry is full of gaps that hurt consumers. The coalition accused the state agency overseeing payday loan operations of lax enforcement and neglecting the industry it governs — or is supposed to.

But the director of the Arkansas State Board of Collection Agencies (ASBCA), Peggy Matson, claims the accusations are simply are not true.

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An editorial in the Arizona Daily Star urges the Grand Canyon State to follow the recent lead of North Carolina and issue widespread restrictions on payday loan companies. As far as columnist Jim Kiser is concerned, this evidences how much states can do to protect consumers… if they are so inclined.

Last week, the last of the North Carolina payday loan outlets closed.

"We've fought payday lending at every turn, and now we're putting this industry out of business here in North Carolina," Attorney General Roy Cooper announced in a March 1 press release. "These payday lenders thought they'd found a way around North Carolina law. Now we're showing them the way out of our state."

North Carolina is just the latest example of what motivated lawmakers can do to protect citizens. Two years ago, Georgia payday loans effectively became a thing of the past when the state passed a law criminalizing them. A violation is punishable by up to five years in prison and a $10,000 fine. The newspaper cites these two states' examples as proof that leaders who are willing to withstand lobbyist pressure can eliminate payday advance companies for good.

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The Payday Loan Times does not suggest that you apply for a payday loan online. Nor do we wish to stop you from doing so. We are simply here to provide both sides of the story to help you make the right decision. If this course of action is something you are considering, you should carefully balance the risks and rewards.

A faxless payday loan can be a tremendous resource for people in need of fast cash. When you apply online, you just fill out a secure form and get the payday advance you need in under 24 hours. There are no credit checks, or questions asked as far as what you plan on doing with the money. It's all yours, and you are free to take care of business.

However, a lot of people get in over their heads. The convenience factor comes at a cost, with high interest rates applying to just about every payday cash loan out there. When you extend the loan (also known as a rollover), or take out a second payday loan to cover the interest, you are heading down a slippery slope. One that may result in serious debt.

Simply put, you don't want to take out a cash advance if you aren't capable of paying it back immediately upon receiving your next paycheck. One and done. That's what this has to be if you want to make the most of your resource. The fees are steep as it is. Take out a cash advance in a second if it can help you with an urgent situation. But do not become lackadaisical when the loan is outstanding.

So think it through. Don't be afraid to ask questions of your payday lender and make sure it is straightforward about the terms of any agreement you enter into. Then plan ahead. Do what you need to do with your cash loans, then get it paid off as soon as you can. When it comes to these financial tools, the borrower's success hinges upon his or her ability to maximize the rewards and minimize the risk.

Be smart. Good luck.

Are payday loans ever a good idea? As you skim through articles that speak to the dangers of these resources and how the overwhelming APR will always come back to haunt those that acquire them, you're probably wondering whether or not a cash advance can ever come in handy.

As long as you protect yourself against certain dangers, the answer is YES. For example, always be careful about identity theft. In order to be approved for a loan, you'll have to supply lenders with a few pieces of personal information.

Beware of how many people view your proof of employment or identification. You may wish to avoid the hassle of fax machines because these expand the possibility that strangers may see specific financial facts or statements. Focus on a payday advance company that specializes in faxless loans. Many online services offer a seal of guaranteed confidentiality on their websites.

Don't be afraid to ask questions. If a lender is reputable, he or she will ignore any past credit mistakes and focus on the request at hand. Make sure you understand the payday loan repayment schedule and circle future paychecks on your calendar. This will help you keep track of when you can most easily afford to pay back the amount borrowed.

Overall, be careful, protect your interests, but don't dismiss a payday loan entirely. You never know when a financial emergency - such as immediate car repairs or surprise medical bills - will strike. You need to be prepared.

After rumors that Advance America would be forced to put a halt to its payday lending in Pennsylvania, an agreement on the matter has finally been reached: its lending bank will stop its payday loan originations at 101 centers in Pennsylvania later this month.

The Spartanburg-based company says BankWest Incorporated will stop offering the services after March 27. Advance America handles payday cash advances and installment loans for BankWest.

The company, however, will service outstanding advances and loans through August and has no plans to shut down its centers in Pennsylvania. It's exploring other banking options in that state for its payday loan services.