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Another member of the Idaho Legislature has promised to introduce a bill that would cap the amount of interest that payday loan providers can charge at 36 percent. Twin Falls Republican Sen. Lee Heider said last month he will attempt such legislation, but no formal bill has been filed yet.

This wouldn’t be the first attempt to pass a limit on payday loan interest rates. A Democratic attempt to do the same thing last year failed — the bill didn’t even reach the House or Senate floor for debate.

Payday loan outlets have been portrayed by some as “bottom feeders” that prey on the economically disadvantaged. Critics say they operate under the premise that those people have nowhere else to go for needed cash, giving lenders free rein to soak them with astronomical interest rates.

Average payday loans go for about $100 or $200, and if borrowers repay them within a week or two, average interest rates can be about 15 to 20 percent. But if it takes months to pay the money back, that interest rate can skyrocket to 100 percent or higher — in some cases up to 500 percent.

Payday loan providers argue that they’re taking risks that traditional banks won’t by giving money to high-risk borrowers, and that risk justifies higher interest rates.

Realistically speaking, the chances of Idaho becoming the 17th state to cap payday loan interest rates are slim. We’re a state that champions the free market and limited government interference in business, and our elected officials often trumpet those ideals. Nonetheless, Heider is right that 500 percent interest rates can put a person already in financial straits hopelessly behind the Eight Ball, and capping them would be the humane thing to do. It would be nice to at least see him introduce a bill that makes it to a floor vote.

But assuming Idaho lawmakers continue their traditional libertarian stance on this issue, potential borrowers should “let the marketplace decide” as much as possible — and do so by avoiding payday loan shops unless it’s a true emergency. That might mean more diligent budgeting and avoiding spending that isn’t aren’t absolutely necessary, as well as patronizing some of the many government aid and charity programs available for low-income people.

Folks who take out payday loans should be fully aware of the massive debt that can mount if they aren’t promptly repaid — and be very careful in how they handle their financial decisions.

* Our view is based on the majority opinions of the Idaho Press-Tribune editorial board. Members of the board are Publisher Matt Davison, Managing Editor Vickie Holbrook, Opinion Editor Phil Bridges and community members Maria Radovich, Mike Fuller, Kenton Lee, Rich Cartney, Megan Harrison and Kelly Gibbons.


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