"Short-Term Credit Options Work for Many"

By D. Lynn Devault, CFSA's Board Chairman

The Op/Ed column “Congress protects troops; what about everyone else?” by Joe Valenti and Lawrence J. Korb mischaracterizes the payday advance product and ignores a key point: Military members are performing a special service to this country and should be treated with special considerations.

Our military men and women have access to federal programs and resources and have been afforded special rates on rent, mortgages and credit cards that help them manage financial difficulties.

Millions of other Americans, however, turn to small-dollar, short-term credit in those instances, including payday advances — a mainstream financial service that compares favorably to other loan products in price and customer experience. Community Financial Services Association (CFSA) members — which represent the majority of payday advance storefronts in the U.S. — are actively engaged in their communities and make significant contributions to U.S. and local economies.

Enacting a cost-prohibitive rate cap of 36 percent, as the column suggests, would effectively ban these businesses and the product. Such prohibitions serve to drive state-licensed and regulated companies out of the marketplace, including those CFSA members that follow the industry’s highest standards and best practices. Such restrictions on payday lending would force Virginians to turn to higher-cost providers, many of which are unregulated, unlicensed and operate offshore.

Regulated short-term credit options should be upheld for all.