A much-discussed report on the alleged “culture of debt” in the United States was discussed earlier this week during a conference in Washington, D.C. In connection with the event, CFSA President Lynn DeVault issued a press release discussing payday loans’ participation in that culture. The CFSA is, of course, the Community Financial Services Association of America, the nation’s trade organization of cash advance lenders. The D.C. report indicted credit services like credit cards and alternative personal loans (fast cash loans included) for their high interest rates and predatory practices. It suggested that low, flat-rate interest rate caps were the best way to protect consumers from dangerous lending.

DeVault countered this suggestion with the claim that, under the restrictions put forward by the report, competitive lending would not be possible. Not only would a thirty-six percent APR lending cap kill cash advance lending and other controversial forms of short-term credit, she stated, but it would eliminate all other lending options as well – including those that have been held up as “model” alternatives to fast cash loans. Even the GoodMoney fast cash loan alternative products written by Goodwill as a lower-cost alternative to payday lending come equipped with a triple-digit interest rate cap, she said, because it just is not possible to break even (much less make anything) on loan products that yield just slightly more than one dollar per one hundred borrowed on a two-week obligation.

As is, the short-term personal loan market offers consumers a wide range of the lowest prices possible, thanks to vigorous competition between cash advance lenders, banks, and credit unions. Stripping away some of those choices will not be good for the market, and will be worse for consumers, DeVault believes.