Here's some news that makes you ponder the role of payday advance loans in society: 

The Federal Reserve reported Friday that non-mortgage consumer debt rose at a seasonally adjusted annual rate of 2.6 percent in August, slowing from July's 4.3 percent.

It was the slowest growth since March, when borrowing declined. Thus, the question remains:

• Does this mean individuals need to use no faxing payday loans more often? Or do they contribute to the problem?

It varies.

Borrowing on credit cards and other revolving accounts rose at an annualized rate of 4.2 percent, down from 4.7 in July. But borrowing for automobiles and similar loans rose in August at an annual rate of only 1.6 percent, well below July's 4.1 percent.

The report did not specifically refer to cash loans online.

Such widespread fiscal problems were largely blamed on gas prices. Total consumer debt (excluding mortgages) rose to an all-time high of $2.35 trillion in August, the Fed reported, even though the rate of increase declined.

If you find yourself in debt such as this, at least read up on bad credit payday loans before making a decision. 

Paul L. Burnley retired after 23 years of newspaper work in Chicago and St. Louis. He now lives in Fayetteville and recently wrote the following, paraphrased letter to The Fayetteville Observer …

I remember times while growing up in St. Louis and Chicago when some people didn’t have enough money to last from paycheck to paycheck.

Some turned to the neighborhood pawnshops to help get them through. These were the older equilvalent of today's cash advance stores.

There were men who would pawn their Sunday suits for $10, just enough to last them until payday on Friday. On Saturday, they returned to redeem their suit by paying the $10 plus a $1.50 charge.

Most looked upon this as a service to the community. No one felt the pawnbroker was making a large profit from these transactions and welcomed the help.

In the ’60s and ’70s, many companies saw this practice as a way to exploit low-income people or those who were unable to obtain loans from banks. Sound familiar? Sound like critiques levied against providers of regular or online payday loans?

They understood that the $1.50 interest on a $10 loan for a week or two could amount to a large rate of interest, compounded over a year. If the loans were larger, and extended over a longer period, the interest would grow as well. In some cases, the annual interest rate on some of these short-term loans could run as high as 400 percent.

Today, this practice has grown into a $3.4 billion-a-year industry. The average borrower is paying $800 for a $325 payday cash advance. These companies are so widespread that in California there are more payday loan outlets than McDonald’s and Burger King restaurants combined.

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While one payday loan company in Canada is praising possible new legislation that will allows provinces to regulate the industry, at least one consumer also agrees this is a good idea.

Cheryl is a Winnipeg woman who asked that her last name not be used. She had taken out cash advance loans several times this year and had always paid it back on time; with the exception of a $500 loan she acquired in mid-September.

Had she paid the loan on time, the total interest paid would have been $75.

"I was off work for a week so I phoned (the company) and told them the check would bounce if deposited. They held the check for three days, then deposited it and it, of course, bounced," she said.

A bounced check on a payday loan: This is never good news. Thus far, service charges have run up nearly $320 of interest within a month of taking out the $500 cash loan.

"They've charged me twice for the bank fees and there is nothing to stop them to continue with the charges," she said."Once you get in, you can't seem to get out."

The Criminal Code sets the maximum annual interest rate at 60%. If proposed legislation is passed, however, provinces will deal with regular and/or no fax payday loan institutions as a consumer protection issue, said Toews.

Manitoba Finance Minister Greg Selinger has promised to re-introduce legislation giving the Public Utilities Board (PUB) the authority to set maximum cost of credit lenders may charge. A Selinger spokesman said the law should be in effect by Christmas.

The faxless cash advance companies will also have to be licensed and bonded, while borrowers will have to receive a documented warning about the high cost of the loan.

Borrowers will also not be able to borrow money on wages they haven't earned yet and will have a 48-hour cooling off period to cancel the contract without penalty. Federal NDP finance critic Judy Wasylycia-Leis welcomed the bill.

"We'll be looking for quick passage to enable provinces like Manitoba to move ahead," said Wasylycia-Leis, a longtime proponent of curbing the high costs of short-term loans.

With Michigan's economy sinking - thousands of unemployed factory workers and underemployed service workers are looking for jobs and many people are struggling to pay their bills - you might expect business to be booming at payday cash loan centers.

In reality, those stores are suffering right along with hundreds of other businesses in the state.

The Detroit Free Press had the story.

A new Michigan law that limits how much providers of cash loans can lend and lowers the fees they can charge borrowers is taking a toll. So is the fact that only those getting a paycheck can qualify for a loan, which leaves out the growing ranks of unemployed in Michigan.

"We haven't seen a spike in business, but the (bad) economy and the law happened simultaneously," said Phil Locke, president of the Michigan Financial Service Centers Association, which is comprised of mostly payday loan store owners. "I don't know if it was the economy or the law."

At least 25 small regular and no faxing payday loan centers in Michigan, out of about 700, have closed since the law took effect in June, Locke said, including five of his 32 lending offices.

Payday loans - also known as check advance loans, postdated check loans or deferred deposit check loans - are a fast and easy way for people to get cash to tide them over until their next payday.

Explosion of payday loans: The number of cash advance payday loan shops exploded in the 1990s. While the industry continues to grow nationwide, it's hit a skid in Michigan because of the strict new regulations and the continuing climb in the number of unemployed.

Some loan shop owners say the law is unfair and unnecessary because the industry already was regulating itself. Even their customers defend them, saying it's faster and easier to borrow money from a payday loan or personal loan center than from a bank or credit union.

Critics argue that payday lenders were not regulating themselves, but were simply taking advantage of desperate, vulnerable people.

"These places prey on the people who can least afford it," said Sen. Martha Scott, D-Highland Park, who lobbied for even lower lending fees.

During the debate on the bill, she presented an amendment to lower the maximum interest rate to 10 percent from 15 percent on bad credit payday loans, but it was defeated.

Consumer advocates from around New York urged state lawmakers last week not to rely only on financial education to protect low-income New Yorkers from issues such as payday advance loans - but to actually crack down on financial abuses targeting the poor.

Speaking at the second of two public hearings, the advocates cited a litany of financial practices they say take advantage of low-income and minority consumers around the state, reported The Buffalo News.

Examples of these practices? They range from high-cost "predatory" lending and tax refund anticipation loans to rent-to-own stores that charge two to three times the retail cost of appliances, electronics and furniture. Critics also relayed stories of consumers victimized by such deceitful lending scams, who are now fighting to save their homes, even as their lives are devastated.

"Predatory [cash advance] lending and fraudulent flipping schemes not only ruin the lives of individual borrowers, but these practices also contribute to the deterioration of urban neighborhoods," said attorney Treneeka Cusack of the Legal Aid Bureau of Buffalo, who handles predatory lending cases."It also increases the burden on an already stressed social service system, which often must provide victims with shelter and other related assistance."

The fight against payday loans: Cusack joined Buffalo attorneys Kathleen Lynch of the Western New York Law Center and David Chadwick of Legal Services for the Elderly, Disabled and Disadvantaged of Western New York in testifying before a pair of Assembly committees in a Manhattan hearing room.

The four-hour hearing, together with a previous five-hour session in Buffalo last month, followed a series of stories in The Buffalo News in June detailing the high costs low-income people pay regularly to cash checks, buy furniture, appliances or electronics, borrow against their taxes, or pay back various kinds of no faxing payday loans.

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What's the response from the payday cash advance industry in Canada to proposed legislation that would actually cap its interest rates?

Glowing reviews.

National Money Mart Company, a subsidiary of Dollar Financial Corp. and Canada's leading alternative financial service provider, welcomed the Government of Canada's new legislation this week that will allow provinces the authority to regulate the regular and no fax payday loan industry.

This new federal legislation - Bill C-26 An Act to Amend the Criminal Code - will exempt provinces from the current restrictive section 347 of the Federal Criminal Code if they legislate a clear consumer protection regime for payday lending.

The provinces of British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick and Nova Scotia have all called on the federal government for authority to regulate no faxing payday loans - wanting to ensure a balance between consumer protection and viable industry practices.

"The federal government has demonstrated important leadership in protecting consumers who use the payday loan product," said Syd Franchuk, President of National Money Mart Company. "We look forward to working with provincial governments to establish regulations for the industry that balance consumer protection with the continued importance and viability of this industry."

It's an interesting take. The cash advance business appears to actually care about its clients. Good to see.

Because payday loan companies up north have actually encouraged regulations on their industry, Canadian cash loan providers will be happy about the following news:

The federal government has introduced changes to the Criminal Code that will allow provinces to regulate the industry.

Justice Minister Vic Toews says the legislation, once it becomes law, will give provincial governments the tools they need to protect consumers from what he calls "questionable business practices."

As it stands, it's illegal under federal law to charge annual interest of more than 60 percent. Yet the rates charged by some fast cash advance companies can amount to 1,000 percent once service charges are included.

The proposed Conservative legislation will allow provinces with consumer protections for payday loan customers to permit interest charges above the 60 per cent threshold.

In response, cash advance loan companies have complained that limiting very small, short-term loans to 60 percent interest would not even allow them to cover basic administration costs.

The proposed legislation appears likely to get all-party consent and be fast-tracked through the Commons. Once it does, the danger of payday loan sharking appears to be over in Canada.

Why would you consider a faxless payday loan? Because you've fallen behind on credit card payments, perhaps.

The American Bankers Association, in its quarterly survey of consumer loans, reported Wednesday that the percentage of credit card payments 30 or more days past due increased to 4.41 percent in the April-to-June quarter, up slightly from 4.40 percent during the January-March period.

"High gas prices and Federal Reserve interest-rate hikes have left consumers with less money in their pockets," said James Chessen, the association's chief economist, in explaining the increase in late payments in the second quarter.

This, of course, is what makes a payday advance so appealing: you can receive cash in your pocket quickly.

Since earlier in the year, gasoline and other energy prices have dropped and the Fed has halted its rate-raising campaign. The central bank last week decided for the second straight meeting to hold rates steady - a move that gives borrowers some more breathing room.

"The financial squeeze may ease a bit in the third quarter as the Fed has stopped raising rates and prices at the pump are down more than 17 percent since the end of June," Chessen said.

The survey is based on a poll of banks and did not specifically mention the use of no faxing payday loans.

The survey also showed that the delinquency rate on a composite of other types of consumer loans, including auto and certain home equity loans, climbed to 1.96 percent in the second quarter, from 1.94 percent in the first quarter.

The cooling of the once-hot housing market, meanwhile, has important implications on consumers and the overall economy, Chessen said.

Consumers who watched their homes rise rapidly in value over the last several years were inclined to spend and borrow against their homes - treating them like ATMs - to support their spending ways. But home prices have since lost altitude.

This, again, leaves the door open for people to consider cash advance payday loan use.

The National Association of Realtors reported Monday that the annual price of existing homes declined in August for the first time in more than a decade.

"Up until now, rising home values have increased wealth, been a source of liquidity for borrowers and allowed consumers to spend out of savings," Chessen said. "It's a different world now, and consumers will need to be more careful in managing their finances."

Lisa Engelkins is a single mother raising a 5-year-old and making less than $8 an hour. She was struggling to keep up with her bills. After seeing an ad for no fax payday loans, she wrote a $300 check to the lender dated for cashing two weeks later and walked out with $255.

Bigger trouble began when she needed money to keep the check from bouncing. USA Today had the story.

Over the next two years, Engelkins repeatedly took out new $300 loans, paying $1,245 in fees for the privilege. The annual interest rate translated to 390% - loan shark levels, but legal in North Carolina in 2001.

Today, the cash advance loan industry thrives in 37 states, often near military bases, courtesy of lawmakers who have neutered usury laws. Payday lending is an annual $40 billion business.

As shameful as that fact is, the response is mixed at best.

Payday loans act across the country: On Friday, with elections looming, Congress decided to act - tepidly. It slapped a 36% annual interest-rate cap on payday cash advances to service members and their spouses after a Pentagon report showed that the average military borrower was paying back $834 for a $339 loan.

Even that level is easily abused, and civilians got no protection.

Georgia tried another approach. In 2004, it banned small loans carrying annual interest rates exceeding 60%; violation could result in jail time. The industry fled the state, which is good for Georgians, but also a measure of how friendly the climate for unscrupulous lenders is elsewhere.

Providers of payday cash loans say they're just providing a costly service that short-term borrowers otherwise would lack. In fact, they have every incentive to act irresponsibly - and they do.

These companies extend credit whether borrowers can afford to repay the loans or not. They need only a bank account and a pay stub. There are no credit checks.

When a borrower can't repay, he becomes a cash cow for the lender, rolling over the loan or taking out a new one.

More than half the industry's revenues come from consumers who take out 13 or more payday loans no faxing a year, according to the Center for Responsible Lending, a consumer group that has worked to restrict payday lending.

North Carolina, where Engelkins got into debt, eventually found a sound way to rein in such problems. The state let its payday lending law expire. Instead, the State Employees Credit Union now offers short-term loans at a 12% annual interest rate. More than 40,000 people a month use the service, undercutting industry claims that it can't turn a profit under caps such as Congress' 36%.

One North Carolina official colorfully describes supposedly cheap payday loan lending as throwing an anvil to a consumer who needs a life preserver. Lisa Engelkins almost drowned that way. Lawmakers should throw people in her situation a lifeline.

Those familiar with the interest rate cap Congress placed on military payday loans this week may also be familiar with the bill it resembles.

“I think it’s fair to say the tide is clearly turning against the exorbitant interest rates and the predatory lending practices that have occurred in the past,” City Council member Kevin Hyde, who introduced first-of-its-kind legislation to cap local, short-term loan interest rates at 36 percent last year, said to the Jacksonville Daily Record. “Congress, in some sense, validated what we did.”

The bill Hyde introduced was originally targeted at military payday cash loan lenders. Hyde - who is also an attorney with Foley & Lardner - said studies from the U.S. Department of Defense initially inspired the legislation, so Congress wasn’t solely taking its cues from Jacksonville.

The DOD report ranked the prevalence of payday loan providing in an area as its eighth top concern for deciding which military bases to close. Payday lenders often target military members because their paychecks are small enough to keep them in need, but steady enough to provide regular payments, according to Lynn Drysdale, an attorney with Jacksonville Area Legal Aid.

She specializes in predatory lending cases and testified for the congressional panel on military cash advance companies a few weeks ago.

“My purpose was to come and say, ‘I represent sailors and service members. This is not some (meaningless) report, I’m telling you what I’ve seen,’” said Drysdale. “I was there to provide what actually happens on the street.”

Drysdale said she’s seen predatory payday lenders charge 390 to 900 percent interest rates for their loans. Payday lenders often require direct deposit banking information to pay back the loans – causing many borrowers to take on more personal loans to ensure their payments don’t bounce and incur more fees.

“(Another) key factor is members of the military are governed by the uniform code of military justice,” she said. “If you don’t pay your debt, it can affect your opportunity for advancement … and they (payday lenders) use the chain of command as a collection arm.”

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