Does Idaho need payday loan operations?

Idaho lawmakers are considering legislation that would limit the amount of interest payday loan lenders can charge.

A bill introduced earlier this month, with bipartisan support, would allow maximum interest of 36 percent on these short-term small loans made against a borrower's future paycheck. 

Sponsors of House Bill 470, Sen. Lee Heider (R-Twin Falls) and Rep. Elaine Smith (D-Pocatello) are pursuing a hearing in the House Business Committee next week, reports the Idaho Press-Tribune, Demonstrators: Cap payday loan interest rates. 

State Impact Idaho's Emilie Ritter Saunders reports that passage of similar legislation in Montana resulted in the closure of dozens of payday loan operations in that state, Idaho's payday lenders could face interest rate cap.

Demonstrators from the Idaho Community Action Network, a Boise-based group committed to "progessive social change," have recently targeted Idaho payday lenders claiming interest rates, sometimes as high as 400 percent, should be outlawed. The interest rates are unfair, ICAN claims, because they are most often applied to payday loans for struggling families who have no other way to access funds needed to pay their bills and get by.

A spokesman for a national payday lending operation told the Press-Tribune that people know what they're getting into when they take out these loans. He said, for borrowers who take out payday loans to pay bills when short on cash, even with higher interest rates, payday loans are a less expensive option than bounced check fees and other consequences of making late payments.

Should the state place a cap on payday loan interest rates, even if it means the end of payday lending operations in Idaho?