No More Payday Predators

If you were thinking straight, would you pay more than 300 percent in annualized interest -- or risk losing your home -- to borrow a few hundred dollars? If the answer is no, you might see the wisdom of regulating the short-term, small-sum credit commonly known as payday lending.

Typically aimed at low-income customers with spotty credit and cash-flow problems, the business has long been controversial. In its classic form, someone who wants to tap an upcoming paycheck borrows $100 to $500 and agrees to return the whole amount in a couple of weeks, along with interest of 15 percent or more (that's 391 percent annualized). As a guarantee, the borrower provides a post-dated check or authorizes the lender to access a bank account electronically. Variations include title loans and installment loans, in which borrowers pledge collateral ranging from cars to chainsaws.