Previoulsly, we asked the question: where will residents of North Carolina go to have their demands for payday loans met? The answer, it seems, is fairly obvious: just a bit south.

With payday loan lending suspended in N.C., consumers are turning their attention to South Carolina. Clover, for instance, is the first town you would encounter if you drove down from Gastonia. With a population of barely more than 4,000, this area already is home to four payday advance operations - and two more are looking for locations.

Payday lending is exploding here and elsewhere along the south side of the state line.

To wit:

– There are now 50 payday stores in York and Lancaster counties, up from 40 in 2004.
– Fort Mill's first payday loan store opened last year.
– On Cherry Road in Rock Hill, there are now 10 payday lending stores in the first 1.3 miles after a southbound driver exits Interstate 77.

Jack Flynn, who owns a payday store on the main street in Clover, says 95 percent of his business are from citizens of North Carolina looking for a cash advance. He plans to open two more stores along the state line this spring.

S.C. law allows payday lenders to charge 15 cents for every dollar borrowed, with loans due in as little as two weeks. That's an APR of 391 percent.

Consumer advocates and N.C. regulators compare the loans to a narcotic - not just bad, but also hard to escape. The Center for Responsible Lending in Durham, a leading critic, says the vast majority of payday loans go to people who already have an outstanding balance on another loan.

"I'm embarrassed for our state," said Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center in Columbia, which advocates for the poor. "We're not only finding a way to prey upon our own citizens but we're finding a way to prey upon citizens across the border."

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An editorial in the Arizona Daily Star urges the Grand Canyon State to follow the recent lead of North Carolina and issue widespread restrictions on payday loan companies. As far as columnist Jim Kiser is concerned, this evidences how much states can do to protect consumers… if they are so inclined.

Last week, the last of the North Carolina payday loan outlets closed.

"We've fought payday lending at every turn, and now we're putting this industry out of business here in North Carolina," Attorney General Roy Cooper announced in a March 1 press release. "These payday lenders thought they'd found a way around North Carolina law. Now we're showing them the way out of our state."

North Carolina is just the latest example of what motivated lawmakers can do to protect citizens. Two years ago, Georgia payday loans effectively became a thing of the past when the state passed a law criminalizing them. A violation is punishable by up to five years in prison and a $10,000 fine. The newspaper cites these two states' examples as proof that leaders who are willing to withstand lobbyist pressure can eliminate payday advance companies for good.

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Now that payday loans are essentially eliminated from the state, where will residents of North Carolina turn for quick cash needs?

According to an article in The Charlotte Observer, consumer advocates believe the demand was created by the suppliers. The Center for Responsible Lending in Durham, a payday advance critic, estimates 99 in 100 payday loans are made to repeat customers.

"Once a person walks through the front door for the first time they're going to keep coming back" because the high fees lead borrowers to repay their loans by taking another loan, said Yolanda McGill, a CRL policy counsel.

If you face a one-time shortfall, what can you do aside from consider a payday loan? McGill suggests:

• Asking your employer for an advance on your next paycheck.
• If you regularly struggle to pay your debts, seek credit counseling.

"If you can't make ends meet, taking on another debt will never improve your situation," she said.Perhaps the most direct replacement for cash advance stores is offered by an unlikely group: mainstream banks. These companies increasingly advertise their overdraft fees as a service to customers.

The fee is charged when a customer writes a check for more than the amount in his/her account. If the customer is allowed to overdraft the account, rather than bouncing the check, they are borrowing money now and paying the bank with their next deposit - the same basic idea that underlies a fast cash advance.

Banks charged an average overdraft fee of $26.90 as of November, according to Bankrate.com. If the fee was an interest rate, it would rival the sums charged by payday lenders, and the practice would be illegal in North Carolina.

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Raleigh, NC — Advance America Cash Advance Centers suspended lending in North Carolina today after its out-of state bank partner said it would no longer finance the loans.

The move came after a months-long hearing in which Roy Cooper, the state attorney general, alleged that Advance America's payday loans violated state lending laws that banned them. The result of the case could determine the fate of Advance America in North Carolina and take a big bite out of the state's short-term lending market.

Payday lending has technically been banned in North Carolina since 2001, when a law that had legalized and governed it expired. But several lenders, including Advance America, Kwik Kash, Ace Cash Express and other cash loan providers sidestepped the ban by partnering with out-of-state banks not subject to North Carolina laws.

First Fidelity Bank of Burke, S.D., the lender behind Spartanburg, S.C.-based Advance America's 117 loan centers in North Carolina, did not provide details of its decision.

Raleigh, NC — North Carolina's 567 consumer finance outlets are currently competing against unregulated payday cash advance firms. However, the industry argues that they can't competete under the state's current lending rules because the interest and fees (max APR of 36%) fail to cover the cost of servicing small loans.

Industry supporters offered a bill that would allow these short term loans to charge up to 150% APR, compared to the unregulated payday loan industry which often charges between 500 - 600% APR. This new class of loan would be up to 18 months in term and $1,200 or less.

Consumer advocates reject this bill on the grounds of the APR and they had their victory Thursday when The House Finance Committee voted 9-17 against recommending the bill.

Supporters argued the proposed rules would have expanded opportunities for people without checking accounts to build up their credit while getting extra cash, unlike payday loans, which do not report to the three major credit bureaus.

Charlie Waters, chairman of South Carolina-based World Acceptance Corp., said after the meeting he doesn't know whether the industry will attempt to retool the bill to attempt to win passage. His firm has said without the changes, it couldn't profitably enter the North Carolina market.

"The vote was more emotional than based on good economic facts," he said.

Raleigh, North Carolina — The case against Advance America, a major payday lender, will go back before the State Banking Commissioner Monday. Attorney General Roy Cooper said the lender is violating North Carolina’s consumer finance laws. Advance America is the largest payday loan company in North Carolina, with over 100 stores statewide.

The state has not sanctioned payday advances since a law expired in 2001. However, some companies have maintained payday lending by working with out-of-state banks.