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The Joelton resident, who has an in-home transcription business, found herself a little short and decided to go into Check into Cash for a $200 payday loan, the legal limit at the time.

Six months later she repaid the $200, along with $360 in “fees” that had mounted during that period.

Today, thanks to the Tennessee legislature, Newell and others can borrow up to $500 from a single lender. For some, the new cap is a good thing. Newellhowever, says she believes it will simply perpetuate the “debt cycle.”

“I don’t think the limit matters,” Newell says. “Some people are going to borrow what they’ll allow because they think something is going to magically come along, and they won’t get into all that debt.”

Fifteen states have banned payday loans. Many other states, including Tennessee, have capped fee rates, according to the Consumer Federation of America.

Previously, the fee was capped at $30 – $15 per $100 – because the principal was capped at $200. Now payday loan businesses can charge no more than $75. Still, there is no limit to how long a lender can simply require a fee instead of the whole amount.

Newell continued, as many do, to just pay the $30 fee every two weeks for six months and not the $200 she had to eventually borrow from her family, piling up an additional $360 in debt.

The $42 billion-a-year industry outnumbers Starbucks and Burger King in outlets across the country. According to one study, the explosion happened a little more than 10 years ago when the number of payday loan offices increased nationwide from less than 500 in the early 90’s to approximately 12,000 in 2002.

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