To the editor:

Independent research shows that the estimated 19 million people a year who access short-term “payday” loans typically use the credit intelligently and as it was intended: as a short-term solution to avoid more expensive fees such as bank overdraft fees, late credit card payment fees and insufficient fund fees from banks and merchants. A recent FDIC study of bank overdraft fees found that such fees may carry an APR of 3,520%.

According to “An Analysis of Consumers’ Use of Payday Loans” by researcher Gregory Elliehausen of George Washington University, “customers used the loans a small or moderate number of times during the past year, typically for less than a month at a time. Such use seems consistent with the intended purpose of payday loans as short-term borrowing to pay unexpected expenses or relieve temporary shortfalls in income.”

Finally, “few payday loan customers considered payday loans as a debt trap. Only about 3 percent of payday loan customers mentioned difficulty of getting out of debt as a reason for being dissatisfied or only partially satisfied with their most recent new payday loan.”

In addition, the Federal Reserve Bank in a January 2007 study found that payday loans were not only NOT “predatory,” but — by providing credit where otherwise there would be none — actually HELP customer households.

Let’s give Kansans a variety of credit options and allow them to choose which are best for them and their families.

Tom Linafelt
QC Holdings,
Overland Park