In an email, Ross said, "An APR is meaningless on a two-week loan that must be paid off and can't be rolled over, as is required under my bill. Without my bill, loans can be continued for a year without being settled, incurring new interest charges for a year, so it would be possible to accumulate an APR of 325.89 percent."

Targeting the poor

The bill's opponents say payday lenders purposely target the poor. They cite a 2008 analysis by Steven Graves, a geography professor at California State University, Northridge. Graves, who has researched the locations of payday lenders, studied neighborhoods in Alabama, California, Montana, Ohio and Washington, D.C., and found short-term lenders clustered near subsidized housing for low-income older and disabled residents. The industry's trade group denied that lenders purposely cluster near these housing units.

"They do have a pattern of going after any demographic that has a guaranteed [government] source of income, especially one that is inadequate to regularly cover living expenses," Graves said.

Payday lender Check 'n Go wants to expand into Pennsylvania. John Rabenold, a lobbyist for Check 'n Go parent company Axcess Financial, said his firm doesn't seek out neighborhoods with subsidized housing.

"I've been here 14 years, and it's never been a criteria that my company has used," he said.

Although payday lenders have no locations in the state, some Pennsylvania residents have borrowed from companies with offices abroad, in other states or on American Indian reservations outside the state. 

The state Department of Banking has punished some out-of-state payday businesses who lent to Pennsylvanians. In February it fined a Delaware lender $150,000 after several residents filed complaints.

Landis said cash-strapped older people have options other than payday loans, such as borrowing from friends or credit unions.

Pennsylvania credit unions lend up to $500, due within 90 days at an 18 percent APR. Most major credit cards offer cash advances with an APR around 25 percent.

"We certainly don't feel that running up debt on any credit card is a good idea, but the interest rate is much lower," Landis said.

Rebecca VanderMeulen is a writer living in Downingtown, Pa.

Also of interest: Payday lenders target Social Security recipients. »