The New Hampshire House passed a cap on payday loans at 36 percent. The payday lending industry, which makes these loans at interest rates sometimes exceeding 500 percent, claims this will put it out of business and prompted Rep. Stephen DeStefano, who opposed the cap ("Capping payday lender interest rates will deprive consumers", Monitor, Jan. 16) to ask where people with short-term needs of $300 to $500 will find that money.

As tax return filing season gets underway, there is a timely, nonpartisan answer to that question that includes the private sector, nonprofits, government supports and yes, individual responsibility. Free income tax preparation sites throughout New Hampshire are a start. Working families can go to free sites and save as much as $200, compared to going to a commercial preparer. That cost may include "refund anticipation loans," another predatory lending practice with interest rates in the several-hundred percent range.

The Franklin Asset Building Coalition provides one such free service in Franklin and Hill. In the Monitor circulation area, TaxAide also provides free filing in Concord and Laconia. People can find sites in their area by calling 877-398-4769. These locations offer electronic filing and if taxpayers have a bank account, their refund can be in their account by way of direct deposit within 10 days to two weeks of filing. And filers get all of their money, with no fees taken out. If they have both a savings and checking account, tax law allows filers to split their refund into both and put some aside for the need that may come up later, such as car repairs or medical expenses that can drive someone to a payday lender.

Where does that money come from? In addition to a refund of money withheld, the Earned Income Tax Credit and other federal tax credits can directly benefit low-income working families. The EITC alone can add more than $4,700 to the income of a household with two or more children. That's the equivalent of a $2.27 an hour raise based on a 40-hour work week. And it costs employers nothing, so it is in employers' interest to promote it to their employees.

Workers who qualify can even get an advance on next year's EITC of up to $1,700, or about $140 per month added to their paycheck. If employers offer direct deposit, workers can arrange with their financial institution for that portion of their check alone to be set aside in a savings account. It amounts to a tax refund with every paycheck.

These concepts may be new to workers, and requires them to do some heavy lifting rather than simply borrow the money. But there are supports from such groups as Casey Family Services, UNH Cooperative Extension, Consumer Credit Counseling of NH/VT, and nonprofit housing organizations such as CATCH Neighborhood Housing, that all have staff who can help someone develop a savings and spending plan.

This may be harder to do than to pay a lender to borrow the money today. And while the onus is on working families, services from a variety of public and private sources can make that burden a little easier.

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