With local governments and the state Legislature attempting to eliminate short-term payday loans across the state, it is important that Salt Lake City readers understand some facts about these loans ("SLC planners set payday-loan store rules," Tribune, Sept. 25).

Borrowers acting responsibly are charged $15 on a $100 two-week payday loan - or 15 percent interest. The much higher interest rates cited in the article only occur if a borrower recklessly rolls a loan over more than two dozen times in a year. It is this reckless behavior that gets borrowers in trouble, not the loan option itself. In fact, if used responsibly there are many cases where these short-term loans can be the smart solution. While a payday loan costs $15 for the two-week period, alternatives like credit-card late fees and overdrawing on a checking account can cost between $30 and $60.

You only have to look to the recent subprime mortgage crisis to see the negative effects of economic illiteracy. Legislators should focus more on programs that help Utahns understand personal finances. That way, borrowers could learn how to make smart financial choices and still have the most possible options available to them.

News Source:
http://www.sltrib.com