Many states have passed legislation targeted at the so called predatory lending or cash advance. It is a clear indication of politicians' readiness to decide what is good or bad when it comes to borrowing money. Most of the time people with limited resources need short-term cash advance and are ready and willing to pay high interest rates to get them. A good example is when paying of taxes comes, many people get loans from banks and even tax preparers in advance of receiving their income tax refunds from the Internal Revenue Service. Despite the interest rates being high, there are more than 10% of people who seek payday cash advance. During the past 25 years, this business has burgeoned from $10 billion to $25 billion annually.



Cash advance or are small loans and deferred presentments of small, short-term cash advances that help you meet your pressing financial needs. Millions of people have found these loans as a fast and convenient way to cover unexpected expenses such as car repair, medical bills and the like. A payday loan can even save you money by helping you avoid bounced checks and late fees on bills.

Recent surveys have been conducted to find out why people use payday loans. It was found out that 75% of those who use payday loans use it to cover unexpected expenses or pay bills. Amongst the most popular reasons were to get a car fixed, pay for medical care, or to cover a monthly bill. If you're a little short on cash, a payday loan is a great way to save money by avoiding bounced check fees and late payment fees.

There are many harsh critics of payday cash advance. An example would be the so-called Center for Responsible Lending who calls them a debt trap. Other groups like The Consumer Federation of America and even the National Association for the Advancement of Colored People are campaigning against the industry. Lenders of payday cash advance already are regulated by 33 states. There are already restrictions on interest rates, fees, number of allowed roll-overs, maximum advance, and maximum term. In addition, a couple dozen states are considering new legislation. In several of them the proposals would effectively kill payday lending.

Clearly, payday cash advance is not a good option or solution for long-term debt, such as home mortgages. If debt is not handled with care, borrowers can dig them into a hole. But common sense dictates that practically everything in life, if mishandled, can create a problem. Payday cash advances aren't for everyone, but, surprisingly to popular belief, most borrowers are not desperately poor. Rather, they have an average income between $25,000 and $50,000. All have bank accounts, a majority has some college education, and almost half owns their homes.

From those numbers, it can be said that the payday cash advance industry is gradually gaining recognition with consumers. Banking overdraft (NSF) fees are typically in excess of $25.00 and put a black mark on your checking record. In these situations a payday cash advance is a workable solution to a NSF charge. This industry is consumer driven and its growth is nationwide, and in other countries as well.

As the number of payday cash advance outlets in the country is ever increasing, some legislators have worried that the industry is taking advantage of people who are outside the financial mainstream by extending expensive, short-term loans to them. The industry argues that payday lenders fill a niche for people who have a temporary cash flow problem. The loans are a better alternative than bouncing a check and later paying a non-sufficient funds fee of close to $30 to a bank, as some would say.

Everybody, including the members of the payday cash advance industry, agrees on one thing that such loans are not for everyone and for every reason. But can help those people struggling to meet sudden financial crisis. Moreover, it is the borrower, not self-appointed consumer advocates, who should decide the future of the payday lending industry.