Speak Out

The Star has received a number of responses to its editorial series on payday lending that was published last week. Below are several letters to the editor on that subject.

Unfair assessment

Re "Prophets ignored, profits adored" (Editorial, June 23):

The Star's editorial is an unfair assessment of the payday loan industry. Responsible lenders provide a low-dollar, short-term credit option to hard-working people. Without payday loans, the demand for short-term loan products would continue, yet consumer options would be severely restricted and more expensive.

The payday advance industry is the product of consumer demand for credit options. In 2007 alone, 19 million U.S. households used payday advances to fill immediate short-term financial needs. Our customers are intelligent and responsible and work hard to manage their personal finances and to maximize their paychecks. When facing unexpected expenses beyond their immediate financial resources, they examine their credit options and act in the best interest of their families.

Spending $17.50 for a $100 two-week payday advance is a less expensive option than bouncing checks, missing payments or accruing late and overdraft fees.

Federal Reserve Bank of New York researcher Donald P. Morgan concluded that consumers in the states of Georgia and North Carolina bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy at higher rates after those states eliminated payday loans. These findings indicate that households without access to payday loans are forced to use costlier credit and suffer greater financial difficulties. Alabama's economy cannot afford this negative economic impact, and neither can its citizens.

Jeff Kursman
Director of Public Relations
Check 'n Go
Mason, Ohio

Angers the Creator

Usury is wrong, so is interest — period, for any reason. So how do you expect the government of Alabama to clean up an act it has no idea of?

It charges interest to its citizens for various reasons, just as the federal government. You pay interest on late taxes, etc. This is wrong. It is not wrong because I say it is. It is wrong because the Creator said it is.

Think for a minute that when you are late paying taxes how that is punishment for someone who may be poor or is going through some hard times. Interest is wrong no matter how much the rate is. You can disagree with this, but on the day you stand before the Creator save that disagreement for Him.

Interest is a major sin with the Creator. It is treated so casually here in America. It has become a part of all of everyday life. This angers the Creator.

It is not just about usury, it is about all interest. For the editorial writer, he or she is learning something new. Interest is just wrong, period.

Hakim Shaheed
Stone Mountain, Ga.

Cold, hard facts

The Star's editorial is a pathetic attempt to equate a legal, state-licensed financial service with sin, and its efforts to disguise opinion as fact are deceitful.

The $17.50 fee is not interest, so any APR comparison is a misnomer. It's a one-time fee that never changes; it's the same amount for 10 days as it is for 20 days. A consumer would have to roll over the loan 26 times in a row (impossible to do) to get to a 456 APR.

The "essential wrongness" The Star uses to describe payday lending's interest rates pales in comparison with 1,409 APR for a $100 bounced check with $54.05 NSF; a 965 APR for a $100 credit-card balance with a $37 late fee; and a 1,203 APR on a $100 utility bill with a $46.16 late/reconnect fee.

And profits? Payday lenders earn the lowest margin, just 7.7 percent on $100 of revenue, while banks earn 18.9 percent and credit unions earn 13.5 percent. So just who is earning excessive profits? Look at payday lending branches compared to bank branches: who can afford the expensive brick and mortar?

Emotional fire and brimstone may have a place in the pulpit, but it is a misleading substitute for cold, hard facts and figures.

Judy Powers
Cleveland, Tenn.

Critique not ethical

Advance America and other responsible payday advance companies offer people something they say has significant value in their lives — a tool to manage their money with dignity and privacy.

Despite the unfair week-long critique offered by The Star's editorial board, we do not try to negatively impact the financial well-being of our customers. In fact, Advance America and other members of the Community Financial Services Association, an industry group, have adopted best practices that include offering any customer the option of repaying an advance over a longer period, at no additional cost.

Many Americans do not, or cannot, use traditional financial institutions to obtain credit; they turn to payday advance centers for a budgeting option which most large banks, credit unions and other financial institutions find difficult to offer.

The majority of our customers are educated people who appreciate why a payday advance, with a comparatively low one-time associated fee (e.g., $15 for $100), makes more sense than accepting the revolving costs of credit cards and consequences related to bouncing a check or neglecting an outstanding bill.

For seven straight days in The Star, more than 8,000 words were used in editorials (largely depicted as factual news articles) critiquing the payday-lending industry.

Yet only one response from industry supporters was allowed to balance out the coverage. If The Star continues to offer up "advice" to consumers in Alabama, we encourage the paper to do so in concert with fair and ethical coverage.

Jamie Fulmer
Advance America,
Cash Advance Centers, Inc.
Spartanburg, S.C.