New Staff Study From Federal Reserve Bank of New York Finds Consumers Suffer When...

New Staff Study From Federal Reserve Bank of New York Finds Consumers Suffer
When Payday Loans are Banned
States with recent prohibitions on payday lending show increased bounced
checks, higher rates of bankruptcy and more complaints related to collections

SPARTANBURG, S.C., Dec. 6 /PRNewswire-FirstCall/ -- A preliminary Federal
Reserve staff study that examined the impact of recent bans on payday lending
in Georgia and North Carolina found that consumers in those states face long-
term, negative consequences when such loans are not available to them.
The study concluded that "Georgians and North Carolinians do not seem
better off since their states outlawed payday credit: they have bounced more
checks, complained more about lenders and debt collectors, and have filed for
Chapter 7 ("no asset") bankruptcy at a higher rate."
Indeed, contradicting the so-called debt trap critique of payday lending,
the study said: "Our findings reinforce and extend other recent research on
the consumer benefits of payday credit."
Written by Donald P. Morgan, a research officer with the Federal Reserve
Bank of New York, and Michael R. Strain of Cornell University, the preliminary
study used several sets of government data to analyze how consumers fared
before and after the passage of legislation banning payday advances in Georgia
and North Carolina.
The study's authors assert that taking away a consumer's option to choose
a payday advance for managing cash flow has an immediate and lasting negative
effect. "We take our results as evidence of a slipping down in the lives of
would-be payday borrowers," they wrote.
The increase in complaints regarding debt collectors and lenders indicates
a higher level of indebtedness among consumers and an inability to make
minimum payments on credit cards and utility bills. Further, higher bankruptcy
rates suggest that consumers are less able to withstand difficult financial
situations over the long term.
"The increased problems are not just 'withdrawal' symptoms preceding a
healthier financial life without payday credit," the report said. "The
problems do not appear temporary."
Ken Compton, chief executive officer of Advance America, said the report
was the latest evidence pointing to the value of payday advances.
"This independent study bolsters one of our primary positions: payday
advances offer consumers a legitimate and competitive credit option," Compton
said. "And we are proud of the service we provide to consumers, helping them
to manage their finances and overcome difficult times."
The study, titled "Payday Holiday: How Households Fare after Payday Credit
Bans," can be found here.
About Advance America:
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the
country's leading provider of payday cash advance services with approximately
2,850 centers and 85 limited licensees in 36 states, the United Kingdom and
Canada. The Company offers convenient, less-costly credit options to
consumers whose needs are not met by traditional financial institutions. The
Company is a founding member of the Community Financial Services Association
of America (CFSA), whose mission is to promote laws that provide substantive
consumer protections and to encourage responsible industry practices.
Forward-Looking Statements and Information:
Certain statements contained in this release may constitute "forward-
looking statements" within the meaning of federal securities laws. All
statements in this release other than those relating to our historical
information or current condition are forward-looking statements. For example,
any statements regarding our future financial performance, our business
strategy, and expected developments in our industry are forward-looking
statements. Although we believe that the current views and expectations
reflected in these forward-looking statements are reasonable, those views and
expectations and the related statements are inherently subject to risks,
uncertainties, and other factors, many of which are not under our control and
may not even be predictable. Therefore, actual results could differ materially
from our expectations as of today and any future results, performance, or
achievements expressed directly or impliedly by the forward- looking
statements. For a more detailed discussion of some of the factors that may
cause our actual results to differ from our current expectations, please refer
to the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2006 and of our Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2007, copies of which are available from
the Securities and Exchange Commission, upon request from us, or by going to
our website: www.advanceamericacash.com.
SOURCE Advance America, Cash Advance Centers, Inc.

Jamie Fulmer of Advance America, Cash Advance Centers, Inc., +1-864-342-5633,
jfulmer@advanceamerica.net