Voters Approve Cap on Payday Loan Interest Rates

Nebraska voters gave a major blow to payday lenders, a segment of the financial industry utilized by the poorest segments of population.

Eight out of ten voters agreed that the state should require limit annual interest rates on delayed deposit transactions to 36 percent. Currently fees add up to the equivalent of a 400 percent annual when customers repeatedly ask for credit against their paychecks.

For voters, the decision was stripped down to differing views of a profitable business category. Are payday lenders offering a service to low income customers or are they profiting off of people in a financial bind?

"We're pleased but not surprised," said Aubrey Mancuso, representing the group favoring the initiative. "We were pretty confident that Nebraskans agreed that 400% interest was just too high."

Operators of some of the Nebraska-based payday lenders speculated they would be forced to get out of the business and close their stores.