Regulators should force national banks to comply with state interest ceilings on small loans, the Consumer Federation of America said Thursday.

At a news conference, Consumer Federation officials complained that some check-cashing operations are circumventing state interest ceilings by offering "payday loans" from out-of-state national banks.

"CFA calls on the Comptroller of the Currency to make sure national banks do not slip through loopholes against usurious payday loans," said Jean Ann Fox, the association's director of consumer protection.

Payday loans are offered to customers who need cash to tide them over until their next paycheck. To get a loan, a customer must write a personal check covering the loan amount plus a fee, which the check casher agrees not to deposit until payday.

A typical $100 loan for 14 days costs $12, an annual rate of 313%

Some states have banned payday loans, while others have imposed strict limits, Ms. Fox said. But some check cashers are getting around those rules by offering loans from national banks, which are allowed to export interest rates permitted by their home states.

For instance, Dollar Financial Group avoids restrictions in Virginia, Ohio, and Texas by providing loans from Pennsylvania-based Eagle National Bank, she said.

Consumer Federation also called on state regulators to limit check- cashing fees, saying it can cost a customer $374.50 to cash 50 paychecks worth $320 each.

Ms. Fox also called on banks to add branches in low-income and minority communities, to give them more alternatives to check-cashing outlets.

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