The word "gouge" comes to mind at the thought of paying 20 percent interest on a two-week loan.

But if you spend some time hanging out at payday loan shops — as I've done twice in years past — you get a more nuanced view of the industry.

Payday loans certainly sting borrowers, charging interest at annual rates averaging 444 percent. But they also fill a need for people desperate for cash.

"I got home and there was a note on the door that said that if I don't pay by tomorrow they're going to turn off the electricity. That's why I'm crying and upset," said one woman in Arnold as she held her little boy's hand. She'd just agreed to pay $80 in interest on a two-week loan of $400.

"My son got a ticket and his time is getting short," said a woman in Normandy, worried that her son might be arrested if he didn't pay up.

On the other hand, the shops also enable the irresponsible. "I went to the boats," one woman told me, sheepishly. She could gamble more than she could afford, then get an expensive loan to pay the rent.

And of course, payday lenders usually leave their clients, who are often poor to begin with, even poorer.

The payday loan industry is under constant attack from consumer advocates, who say it charges unconscionable interest and drags people deeper into debt. Payday lenders respond that they're providing a needed service to people that other lenders shun.

Meanwhile, a handful of credit unions suggest a middle way — a form of payday loan that automatically builds a savings account designed to break the payday cycle. If compromise is possible, the credit unions may point the way.

To hear consumer advocates tell it, the problem really isn't the 15 to 20 percent charge on a two-week loan. It's that people usually can't pay up on the due date, so they pay another 20 percent to roll over the loan, and another 20 percent two weeks later.

Under Missouri law, payday lenders can renew the loan six times and collect up to 75 percent of the loan amount in interest.

Once they hit the limit, borrowers can bring in their paychecks to pay off the old loan, then immediately take out a new one for the same amount. So the cycle can go on and on.

The Missouri Division of Finance says the average loan is rolled over 1.6 times. It counts 1,066 payday loan shops in the state, and they made 2.4 million loans last year.

That brings us to the alternatives being offered by a handful of credit unions, including Gateway Metro and St. Louis Community.

Gateway Metro lets consumers borrow $100 to $600 for 30 days. The charge is a standard $40. That about equals what a payday lender would charge on a $100 one-month loan, but it beats the payday lenders at higher amounts.

The kicker comes when the borrower pays it back: 5 percent of the loan amount goes into a savings account. Since the average payday customer borrows several times a year, the savings account grows. When it is big enough, the customer can use the savings to handle an emergency, and break out of the payday cycle.

"They'll eventually save up enough to get back on track," says Gateway spokeswoman Cristy Wirtel.

Can the credit union make money doing that? "It's profitable. Are we making a lot? No," Wirtel says. "It's more of a service than anything else."

If credit unions can't make a lot of profit, they won't ballyhoo their short-term loans in advertising across the region, the way payday lenders do.

Rep. Mary Still, D-Columbia, has been waging a one-woman crusade to rein in the payday industry, holding her own hearings around the state. She wants to set an annual percentage rate limit of 36 percent on payday loans.

That would translate to $1.38 on a two-week loan of $100, says Randy Scherr, lobbyist for the payday loan industry in Jefferson City. "We couldn't pay the rent on that."

He's probably right. He points to an industry-sponsored study by the Ernst & Young accounting firm indicating that it costs the lender $13.89 to make each loan.

Even if Still could kill the payday shops, it's not clear that she could kill the high-interest loan business in Missouri. Illinois cracked down on payday shops several years ago, limiting rollovers and holding interest to 15.5 percent. As a result, the state saw a drop in payday loans and a big increase in high-interest "consumer installment" loans and title loans.

Title loans are high-interest loans secured by the borrower's car. Installment loans last four months or more, but sometimes have interest rate of "like 1,000 percent," said Sue Hofer, spokesperson for the Illinois Department of Revenue. A newly passed law would limit that interest to 100 percent and the set the minimum term to six months starting in March, Hofer says.

In Missouri, Still's bill went absolutely nowhere last year. It was referred to a committee whose vice chairman is Republican Don Wells, who runs a payday loan shop at home in Cabool.

But another effort is gathering steam. House Speaker Steven Tilley, R Perryville, and Minority Leader Mike Talboy, D-Kansas City, formed a working committee to study the issue. Wells was on it. Still was not, and she complains that she wasn't allowed to speak at the group's meetings.

Tilley hasn't filed his bill yet, but a draft from late in the process has been floating around the capital. It would cut the maximum interest collected to 60 percent from 75 percent, and reduce the maximum rollovers to three from six. It would also require a one-day cooling-off period between the time a borrower pays off one loan and takes out another at the same shop.

A borrower in trouble could also insist on 60 days to pay off a loan without interest.

Borrowers often hand over postdated checks when they take out a loan. Lenders would be forbidden from threatening prosecution for writing a bad check.

On the other hand, the bill would give lenders the right to refuse to renew a loan. Right now, borrowers have the right to demand six rollovers.

The payday industry is supporting the bill.