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Arizonans should reject a ballot initiative launched this week that would keep payday loans legal in the state beyond 2010.

The measure's supporters say payday lenders provide a needed service; however, these loans do more harm than good. The state would be better off without them.

Our idea is for voters to educate themselves about the new initiative, called the Payday Loan Reform Act, as well as a rival initiative called Stop Payday Loans. Once Arizonans learn what the initiatives are about and who is behind them, we are confident they will support the latter.

We believe Stop Payday Loans, which was launched last year by state Rep. Marian McClure, R-Tucson, would benefit the state and its citizens. McClure's measure would repeal the section of the law that allows the payday-lending industry to flourish and also make it a felony to offer a payday loan.

The state law that legalized payday lending was passed in 2000. The law is set to expire, or sunset, in 2010 unless the Legislature or voters take action to renew it.

The Payday Loan Reform Act, which is backed by payday lenders, would eliminate the law's sunset provision, paving the way for lenders to operate in Arizona as long as they wish.

That shouldn't be allowed to happen.

The Payday Loan Reform Act would modify lending practices in ways beneficial to consumers by slightly lowering fees; prohibiting loan renewals, or rollovers; and offering no-fee payment plans for borrowers who are unable to pay back the loans on time. However, the fact remains that payday loans are ultimately harmful to many consumers.

The fees lenders charge for these short-term loans equal annual interest rates of 400 percent or higher.

Cash-strapped and financially naïve consumers with a sudden economic crisis have often made their situation worse — not better — by taking out a payday loan. Often, they end up paying much more in fees than their original loan amount.

Howard Fischer reported in Tuesday's Star that Stan Barnes, a lobbyist for payday lenders, said payday loans are "a viable and often cheaper option for consumers in times of financial emergency."

We are doubtful, though, that the payday loan industry would have proposed to reform its practices were it not for the pressure it is facing in Arizona and a slew of other states.

Some states have been successful in getting rid of payday lenders, to the benefit of consumers.

The North Carolina Office of the Commissioner of Banks released a study in November saying that residents have done fine in the year after payday lenders were outlawed there.

"Working people don't miss payday lending. They have a lot of financial options, and they use them," Mark Pearce, the office's deputy commissioner, told the Charlotte Observer. The Observer also reported that people faced with a cash crunch use multiple options, including skipping an expense or paying it late; dipping into savings; tapping friends and family for loans; and using a credit card to obtain a cash advance.

Supporters of Stop Payday Lending and the Payday Loan Reform Act must each gather 153,365 valid signatures to make it onto the November ballot. We encourage voters to support Stop Payday Loans. We also urge them not to sign any petitions associated with the Payday Loan Reform Act or the group backing the measure, Arizonans for Financial Reform.

Arizona should follow the lead of North Carolina and other states and show payday lenders the door.

Direct your comments on today's idea to ideaforum@ azstarnet.com or letters@ azstarnet.com with "Idea Forum" in the subject line.