It is unfortunate that Arizona lawmakers keep striking down efforts to preserve short-term credit options for consumers of the state.
Cutting off access to payday loans and other types of short-term credit will only force Arizona consumers to more onerous options such as unregulated, off-shore Internet lending or pricey bounced-check and overdraft fees.
Examining the average earnings of the two largest publicly traded companies in the payday advance industry illustrates the low profit margin for short-term lenders.
The earnings for Advance America (AEA) and Q.C. Holdings (QCCO) for 2009 show the average earnings are $1,824 per month, or $421 per week, or $9.36 per hour per location. That is clearly the cheapest of all in the financial services sector — yet is the one picked to be too expensive.
This is further evidence that the liberal media is misguided in its arguments against payday lending, largely because of the errant use of APR, or annual percentage rates, to calculate these short-term, two-week loans, not the fees themselves.
— Allan Jones is founder and chairman of Check Into Cash, Inc.