The lenders demand total repayment or loan rollovers at interest rates of up to 800 percent, according to the Consumer Federation of America, the NAACP and Center for Responsible Lending, a North-Carolina-based community-run financial institute.

The solution to that problem, which drives more and more consumers deeper and deeper into debt they can never fully repay, is to outlaw the payday lenders\' practices, as 11 states have done, or strictly regulate state usury -- interest rate -- caps and enforce those rules, the organizations said.

Payday lending will cost consumers $4.2 billion this year and it\'s particularly acute during the holiday season when lower-income consumers go into debt to buy gifts for loved ones, speakers said.

The consumers are trapped because while the average payday advance loan is only $325, the lender requires entire repayment two weeks later -- at the time of the consumer\'s next paycheck -- or a complete loan rollover at enormous interest. And the rollovers continue, according to the study for the center.

"The industry is dependent on keeping borrowers caught in a debt trap," said center President Michael Calhoun. "Ninety percent of payday loans go to people who have had five or more such loans per year and 60 percent go to people with 12 or more such loans a year. The interest rates are 400 percent to 800 percent."

Payday lenders are regulated not by the federal government but by the states, if they are regulated at all, he noted. Calhoun said 39 states allow some form of payday lending. And those victimized, he noted, are often the poorest and least able to repay.

This year, however, Congress got into the act, by capping annual interest rates for loans to anyone in a military family at 36 percent, Calhoun noted. That\'s particularly helpful in military-heavy states, such as North Carolina, where young soldiers and their families are victimized by payday lenders. The lenders have since left North Carolina, speakers said, because the state ended its 5-year experiment with permitting them.

Other states that ban payday lending include Minnesota, Maryland, New York, Vermont, Massachusetts, New Jersey, Connecticut, Georgia and West Virginia, said CFA Consumer Protection Director Jean Ann Fox. And New York Attorney General Eliot Spitzer (D)--who was elected governor Nov. 7--aggressively pursued Internet payday lenders who tried to circumvent his state\'s law, she said.

"New York has a 25 percent interest rate cap and check-cashing agencies are barred from making loans," Fox added. Besides Spitzer\'s campaign against Internet payday lenders, she said the state Banking Department "went after the rogues" who tried to set up storefront payday lending in the Empire State on the sly.

Payday lenders\' victimization disproportionately hits African-Americans and to a lesser extent Hispanics, said NAACP Chairman Julian Bond. Its impact prompted the civil rights group to start in 2000 on a campaign to outlaw payday lending. Bond called it "predatory."

"The NAACP has struggled for economic empowerment" as the second phase of the civil rights movement, Bond said. "Ending this kind of legal loan-sharking would be a great step in pursuit of this goal."

This article was written by Press Associates, Inc., news service. Used by permission.