Payday loans do fill a need

To the editor:New Hampshire legislators’ efforts to further limit access to short-term payday loans are an example of this country’s glaring problem with economic illiteracy (“N.H. lawmakers stall loan cap expansion, electric bill subsidy,” Jan. 6 NHBR.com).Short-term “payday” lenders have been under attack by state and federal lawmakers who denounce their services as “predatory.” But across the country, borrowers in need of emergency cash choose these loans willingly, over other financial options. Research by a Federal Reserve economist found that 88 percent of short-term borrowers are satisfied with their loans.A recent study found short-term lenders’ average profit before taxes is $1.37 per $100 loaned. Imposing unrealistic fee caps on payday loans to kill the industry will leave consumers — already struggling in today’s economy — without vital access to short-term credit.It would be short-sighted and elitist for politicians to make snap judgments about financial services they have never needed themselves, and to prohibit financial options without thought of the consequences.

Sarah Longwell
Director of Communications
Center for Consumer Freedom