Plans to remove or limit pay day loans could cause even more serious financial difficulties for some households as their last resort is taken away, according to an industry expert.

If the $15 for each $100 borrowed (if borrowers shop around), charged by pay day loan companies was no longer available, many would have to resort to drastic measures, such as bouncing checks, which would cost $48 to $60 for each check.

Alternatively, bills could be ignored, leading to the cutting off of utilities or prosecution, or offshore lenders could be used, who can charge between $25 and $30 per $100 borrowed.

Lawrence Meyers, a financier involved in the lending industry, told Blogger News Network: "A responsible borrower is that borrower who understands these loans are intended for emergencies, who have chosen to enter into the transaction because cheaper alternatives were not available."

In the three years following the ban on pay day loans in Georgia, the Federal Reserve Bank in Atlanta returned an extra 1.2 million checks annually, according to a 2007 Federal Reserve Bank of New York staff report.

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