In part, consumer demand is at the root of payday loans' rise in popularity as the fees mainstream institutions charge grow, an executive from a leading payday loan firm stated.

"When we first started this business, we saw our market niche as offering consumers a more affordable way to get through a situation where they were otherwise going to face an even higher fees for bounced checks or late payments on credit cards," said Jamie Fulmer, spokesman for Advance America, one of the leading national payday loan companies with 2,800 locations nationwide.

Fulmer pointed out that the total fee burden from one bounced check from a credit union could be as high as $50 or more-a $25 dollar fee from the credit union and then $25 or more from the merchant. Further, if the fees drive the checking account balance even lower, more checks can bounce generating more fees.