The Bloggers Network conducted this online interview with the head of the Ohio Association of Financial Service Centers, Jamie Frauenberg.  Jamie, who is also a Sr. VP at CheckSmart, has been on the front lines these past weeks in the “battle of Ohio.”   From the interview:

If the Payday Loan industry disappears, where will people with no credit go?

Customers use payday loans to avoid other fees or less desirable alternatives. They choose between bouncing a check or overdraft protection, incurring late fees on routine bill payments, borrowing from friends, family or church, taking out a cash advance on a credit card, using an online lender or taking out a payday loan.  All of these products have a cost associated with them.

Eliminating payday loans just forces people to chose alternatives they had previously tried to avoid.

Recent studies have shown that without payday loans, customers bounce more checks, complain more about lenders and debt collectors, and file for Chapter 7 bankruptcy at a higher rate. One survey found some customers had utilities disconnected, went without a prescription medication or ended up with a damaged credit rating.

In each case, consumers may have been better served by payday advances, which often offer lower fees and do not negatively impact credit ratings.