The Wall Street Journal offers advice on everything from what to do if you are getting hit with overdraft and late fees at your bank to what you can do if someone posted embarrassing photos of you on Facebook or MySpace.

That’s the key to the future of the economy according to this story in yesterday’s New York Times:

“Credit, the disposition of one man to trust another, is singularly varying,” Walter Bagehot, the financial journalist, wrote 135 years ago.

Payday lending customers pay back 95% of their loans when due.  That’s a credit system that seems to be working. 

While the study has nothing to do with payday lending, the Pundit wanted to take this moment to remind readers that payday lenders are not failing due to people not paying them back.  The fact is that, unlike many mortgage lenders, payday lenders do assess a borrowers ability to repay the loan.  And more than 95% of borrowers do pay the loans back.

WJLA reports: The new law limits borrowers to one payday loan at a time and extends the amount of time they have to repay it.

That can be the only explanation for why the Arizona city of Casa Grande thinks payday lenders should be a quarter mile apart. 

That won’t work well.  This Virginia paper is talking about the new Internet lending rules which take effect in the state. 

WalletPop thinks so.

Wow.  Banks are cancelling unused credit cards or as this columnist on Bankrate.com describes it, banks are, “…taking back…unused credit.”  

Never thought I’d live to see the day.

The nation’s largest payday lending company, Advance America, is asking New Hampshire regulators to approve a new short-term lending service that doesn’t fall under the recently imposed 36% rate cap.  From the story: 

According to a letter sent to the New Hampshire Banking Commissioner, Advance America wants to switch over to doling out open-ended small loans, which, it claims, are “not legally subject to the 36 percent interest rate cap” on title and payday loans, according to a letter written by attorney Steven Lauwers of Rath, Young & Pignatelli.

“(T)he interest rate on open-end small loans is not capped at 36 percent,” Lauwers wrote in a letter dated Dec. 9. “Instead, any interest rate is permitted, provided it is agreed to in writing by the lender and the borrower.”

Advance America has asked Banking Commissioner Peter Hildreth for his opinion on whether it’s right about the lack of limitations on the interest-rate cap. Hildreth has not made a ruling yet, but he said he’s talking to lawyers and considering the likelihood that Advance America would take its case to court if he rules against it. He said he would likely make a judgment call this week or next.

The Payday Pundit will stay on top of it.

The Chicago Tribune could have written a better headline for this story on Internet lending:

One reason for online payday loan growth is that it is more difficult to regulate such companies than brick-and-mortar stores, said Tom Feltner, policy director for Woodstock Institute, an economic development non-profit that has studied the industry.

Last month, for example, Cash America said it would close a third of its Ohio stores due to tougher state restrictions. Advance America, another leading payday lender, also said it might have to trim its Ohio network.

Legislators take heed.  If you want a tightly regulated industry, don’t force storefront lenders to shut down.  Consumers need short-term credit and will find it on the Internet.