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Annual interest rates on the loans can exceed 400 percent, Stop Payday Predators said. Arizona law caps the amount of such loans at $500, but the law allows people to make repeated loans, digging further into debt. The agency works with the public to help establish accounts at lending institutions such as credit unions, which generally offer loans at lower interest rates than banks and savings and loans, she said. With forecasts of continued national and local economic stagnation or recession, Tucson-area officials expect that some homeowners desperate to avoid foreclosure will resort to payday loans to cover mortgage payments. If they miss or are late on several payments, those people could see their dreams of homeownership spiral away as interest rates on the payday loans quickly escalate beyond their ability to pay. As for the check cashing places pandering to those with bad credit, so do traditional banks and lending institutions, they do it by charging higher interest rates for loans. Find Out More

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