Nearly 128,000 people took out more than 1 million payday loans in South Carolina last year, totaling $402 million. Borrowers paid $60.4 million in fees, according to a report released Wednesday.
The chairman of the South Carolina House Labor Commerce and Industry Committee said the report shows a 2009 state law has stopped the "rampant abuse and misuse" of the two-week loans. That law limited the number of two-week loans to one at a time, up to $550 each, and created an online database to track them.
Before the law, the number of loans exceeded 4 million a year.
Borrowers now must wait at least one day between loans and lenders must check the database to ensure customers don't have outstanding payday loans elsewhere.
With the reduction in loans also comes a drop in payday loan stores - from 1,100 before the law to 324 last year as the law effectively shut down lenders that were doling out multiple loans simultaneously.
The annual report, based on an online database, shows borrowers took out 9% fewer loans in 2013, compared with 2010.
But critics argue the restrictions didnt go far enough. Payday lenders are "still making an awful lot of money," said Sue Berkowitz of the Appleseed Legal Justice Center. "We need to be looking at better ways to promote affordable credit that doesn't trap people in debt."
The 2009 law was a compromise, as many senators wanted to abolish the industry entirely. South Carolina's Legislature passed it over the veto of former Gov. Mark Sanford, who argued consumers need access to loans.
The report shows half of all borrowers took out more than 10 payday loans last year. One percent - 1,620 people - took out at least 24. On average, people who paid off a loan wrote a check for another one nine days later.
Sen. Luke Rankin said the figures show the problem continues. He still wants the industry banned, arguing that people taking out the short-term loans are still paying too much for credit.
On the national level, earlier this month, six U.S. senators sent a letter to the Consumer Financial Protection Bureau pushing the agency to take action to protect consumers from predatory storefront and online payday lenders.