Cash America International Rises As Its Customers Drown In Debt

When its first quarter numbers came out last month, pawn loan provider and payday loan operator Cash America International Inc. (NYSE: CSH) said revenue from pawn loan and cash advance fees boosted first-quarter earnings higher than previously expected. The Fort Worth-based company said earnings rose 34 percent to $25.8 million, or 86 cents per share, from $19.2 million, or 63 cents per share, in the year ago period.

What many may not know, however, is how much money they and others are making at the expense of working families with Internet loans that are outside the regulatory reach of most state consumer protection agencies.

"It's insane. It is growing like wildfire," said Henry Coffey, a Baltimore-based stock analyst who tracks the payday loan industry including Cash America's online loans. One factor in the growth of online loans, which charge as much as 2,000 percent interest, is that they effectively hook borrowers into cycles of debt, often forcing people to take second and third loans to cover ballooning debts."If you are paying over 1,800 percent interest, you will never get out of that debt," said Elizabeth Schomburg, an official with Family Credit Managing Services, a Rockford-based credit counseling agency.

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