As his oldest son battled cancer, Richard Gilmore battled lenders who charged him interest rates of 391 percent.
Gilmore, an Ohio social worker, said he fell behind on his bills after struggling with his own medical problems. Seeking quick cash, he obtained several $500 loans from what are known as payday lenders -- businesses that make small, short-term loans with fees and interest rates that, calculated on an annual basis, far exceed rates charged by traditional banks.
Payday lenders say that they're often the only choice for cash-strapped folks with battered credit. But Gilmore said that, for him, they proved a poor choice: The stress of trying to pay off some $7,000 in loans, he said, made him nearly suicidal.
Then, in the midst of his financial nightmare, Gilmore's 19-year-old son was diagnosed with stage 3 lymphoma. In an effort to put his financial troubles behind him and focus on his son, Gilmore pleaded with payday lenders to let him work out a repayment plan. The lenders, he said, wouldn't budge.
"I was having a really hard time just making it week to week," Gilmore said.
Tracy Frysinger has a different story to tell. A single mother in Cleveland with two grown daughters, Frysinger, 42, spends her days working in the accounting department of a manufacturing company and her nights in college, working toward a degree in business management.
When money is tight, she said, she is grateful for payday loans.
Frysinger estimates that she has taken out about 20 payday loans in the past two years, also with interest rates at about 390 percent. She has used the loans -- each worth a few hundred dollars -- to pay for expenses ranging from textbooks to car repairs.
With a poor credit history, Frysinger said she doesn't qualify for bank loans. And, she added, "I don't have family to go to to say 'Hey, my car is broken down, can you help me out?'" Payday loans, she said, work for her because she's careful with her money.
"If you think that you're going to borrow something, you have to be able to manage and budget your money," she said. "If you can't do that, you shouldn't be trying to go there to borrow money."
Stories like those of Gilmore and Frysinger fuel what has grown into a national standoff between payday lenders and those who oppose them. Legislative and legal battles abound from coast to coast as public officials debate whether payday lenders hurt or help Americans who have fallen upon hard times.
Traditionally, payday lending works like this: A borrower provides the lender a postdated check for the amount being borrowed plus loan fees. The lender holds on to the check for the term of the loan -- typically two weeks -- and cashes it on the borrower's next payday.
According to the Community Financial Services Association of America, a payday lending trade group that represents nearly two-thirds of the nation's payday lenders, the typical fee charged by lenders is $15 for every $100 borrowed, which, if calculated over a year, results in a 391 percent interest rate.
But payday lending opponents say they've seen rates reaching above 1,000 percent and they accuse the industry of preying on vulnerable borrowers. They argue that payday customers often land in a "debt trap": They can't repay their loans on time and find themselves taking out additional loans or rolling over existing loans -- paying interest rates on the loans while delaying payment on principals -- to make ends meet.