A legislative specialist at The Heartland Institute in Chicago has expressed concern that some lawmakers want to minimize the options for people who are in debt or who need an instant cash loan.

Writing in the Daily Herald, Matthew Glans said that because major lenders have become increasingly risk-averse, it seems "ill-timed" to reduce the alternatives available to borrowers.

Senator Dick Durbin's proposed interest rate cap of 36 percent ignores the benefits of pay day lending, according to the specialist.

"These loans emerged to meet consumer demand when other sources of financing were unavailable," stated Mr Glans.

"The decision as to whether short-term loans are acceptable should lie in the hands of consumers, not state officials."

In fact, a study by the Federal Reserve Bank of New York found that states with bans on pay day lending have seen higher rates of bankruptcy and an increase in bounced checks.

According to Goodwill Industries, some American citizens have opted for short-term loans to make mortgage repayments in recent months.

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