What we verified in “Payday loans: what they cost and the alternatives”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to the CFPB, there is no set definition, but a payday loan is usually a short-term, high-cost loan, generally for $500 or less, typically due on your next payday; depending on state law, it is offered by storefront or online lenders; many states limit the loan size; it is repaid in a single payment, typically two to four weeks later; to repay it you give a post-dated check or permission to debit your bank, credit union or prepaid card account, and if you do not pay on time the lender can cash the check or withdraw the money; and payday lenders generally do not verify your ability to repay while meeting your other obligations.

   Sources 1 · What is a payday loan? (reviewed May 28, 2024): 'While there is no set definition of a payday loan'; 'it is usually a short-term, high-cost loan, generally for $500 or less, that is typically due on your next payday'; 'payday loans could be available through storefront payday lenders or online'; 'many states set a limit on payday loan size'; 'The due date is typically two to four weeks from the date the loan was made'; 'you generally write a post-dated check for the full balance, including fees'; 'the lender can cash the check or electronically withdraw money from your account'; 'Payday lenders do not generally verify your ability to repay the loan while meeting your other financial obligations' · Checked October 31, 2026

2. According to the CFPB, many state laws cap payday loan fees at $10 to $30 for every $100 borrowed; a typical two-week payday loan with a $15 per $100 fee equals an annual percentage rate (APR) of almost 400 percent, while credit card APRs range from about 12 to about 30 percent; and some states have no payday lending because their law does not permit it or lenders choose not to operate at the fees allowed.

   Sources 1 · What is a payday loan?, 'How much does a payday loan cost?' and 'Is my state allowed to ban payday loans?': 'ranging from $10 to $30 for every $100 borrowed'; 'A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent'; 'APRs on credit cards can range from about 12 percent to about 30 percent'; 'Some states do not have payday lending because the loans are not permitted by the state’s law' · Checked October 31, 2026

3. According to the CFPB, with a typical fee of $15 per $100, if you need $300 today you would have to repay $345 in a couple of weeks; in states that do not ban or limit renewals, the lender may encourage you to pay just the fee and extend the loan, and then you would spend $45 and still owe $345 when the extension ends: $90 to borrow $300 for one month.

   Sources 2 · Should I get a payday loan if I need money now? (reviewed August 26, 2024): 'A $15 per $100 fee is typical'; 'if you have an emergency and need $300 today, you would have to pay back $345 in a couple of weeks'; 'the payday lender may encourage you to pay just the fee and extend the loan another few weeks'; 'you would spend $45 and still owe $345 when the extension is over'; 'you’re spending $90 to borrow $300 for one month' · Checked October 31, 2026

4. According to the CFPB, renewing or rolling over a payday loan generally means paying a fee to delay repayment, and that fee does not reduce what you owe: you still owe the principal plus the rollover fees; many states limit or ban rollovers; if you roll over several times you may pay several hundred dollars in fees and still owe what you borrowed; and if you are having trouble, you can contact the lender and ask for an extended repayment plan.

   Sources 3 · What does it mean to renew or roll over a payday loan? (reviewed November 25, 2024): 'you pay a fee to delay paying back the loan'; 'This fee does not reduce the amount you owe'; 'You will still owe the principal and additional fees for the rollover'; 'many states limit or ban these renewals or rollovers'; 'you may pay several hundred dollars in fees and still owe the amount you borrowed'; 'contact your lender and ask for an extended repayment plan' · Checked October 31, 2026

5. According to the CFPB, besides the finance charge, a payday loan can bring other fees: rollover fees, repayment plan fees (depending on your state), late or returned check fees, and your bank or credit union may charge a non-sufficient funds fee; some state laws require lenders to offer an extended repayment plan, sometimes at no extra cost, and if your state does not, some lenders may still offer one; if the money is loaded onto a prepaid card, there may be card fees; and you should read the whole agreement before signing.

   Sources 4 · What are the costs and fees for a payday loan? (reviewed November 25, 2024): 'Renewal or rollover fees'; 'Repayment plan fees'; 'Some state laws require payday lenders to offer extended repayment plans'; 'you may be able to get additional time to repay your loan without any additional costs or fees'; 'some lenders may still allow you to take an extended repayment plan, which is different than a rollover'; 'the lender might charge a late or returned check fee'; 'an “NSF” or non-sufficient funds charge'; 'Prepaid debit card fees'; 'Be sure to read the loan agreement carefully' · Checked October 31, 2026

6. According to the CFPB, for a payday loan you do not put up collateral as at a pawn shop, but you usually give a post-dated check or access to your account; under federal law, the lender cannot condition the loan on your preauthorizing automatic recurring electronic transfers; if your account lacks the money when the lender tries to collect, your bank or credit union will likely charge you for a bounced check or overdraft, and depending on your state the lender may charge another fee; if you do not repay, the lender can sue you; and if you have problems, you can contact your state regulator or attorney general, or complain to the CFPB online or at (855) 411-2372.

   Sources 5 · Do I have to put up collateral for a payday loan? (reviewed November 25, 2024): 'You don’t have to put up collateral like at a pawn shop'; 'you usually do need to provide a post-dated check or electronic access'; 'Under federal law, however, they can’t condition whether or not they give you a loan based on whether you ‘‘preauthorized” automatic and recurring electronic fund transfers'; 'your bank or credit union will likely charge you fees for the check bouncing or for overdrawing your account'; 'the payday lender can sue you for the funds'; 'contact your state regulator or state attorney general'; 'by calling (855) 411-2372' · Checked October 31, 2026

7. According to the CFPB, you have the right to stop a payday lender from taking automatic payments from your account, even if you allowed them before: you tell the company, by phone and in writing, that you are revoking authorization, and you tell your bank or credit union the same; you can also give your bank a stop payment order at least three business days before the payment, and if the bank asks for it in writing, send it within 14 days of your oral notice; banks commonly charge for stop payment orders; if you see a payment you did not authorize, tell your bank right away, because federal law lets you dispute it and get your money back if you tell the bank in time; and canceling the automatic payment does not cancel the contract: you still owe the loan.

   Sources 6 · How can I stop a payday lender from electronically taking money out of my bank or credit union account? (reviewed August 28, 2023): 'You have the right to stop a payday lender from taking automatic electronic payments from your account, even if you previously allowed them'; 'Call and write the company'; 'Call and write your bank or credit union'; 'at least three business days before the payment is scheduled'; 'provide it within 14 days of your oral notification'; 'banks commonly charge a fee for stop payment orders'; 'Federal law gives you the right to dispute and get your money back for any unauthorized transfers'; 'Revoking or cancelling your automatic payment does not cancel your contract with the payday lender' · Checked October 31, 2026

8. According to the CFPB, to know whether a payday lender is licensed in your state, check with your state regulator or attorney general; not all states allow payday lending, some allow it and require a license, and in some states a payday loan made by an unlicensed business may be void, and the lender may not have the right to collect it.

   Sources 7 · How can I tell if a payday lender is licensed to do business in my state? (reviewed August 26, 2024): 'verify the information with your state regulator or attorney general'; 'Not all states allow payday lending'; 'Some states allow payday lending and require lenders to be licensed'; 'if a payday loan is made by a business that is not licensed in that state, the payday loan may be void'; 'the lender may not have the right to collect or require the consumer to repay the payday loan' · Checked October 31, 2026

9. According to a CFPB study of more than 12 million storefront payday loans over 12 months, four out of five payday loans are rolled over or renewed within 14 days, and most payday loans are made to borrowers who renew so many times that they end up paying more in fees than they originally borrowed.

   Sources 8 · CFPB Finds Four Out Of Five Payday Loans Are Rolled Over Or Renewed (March 25, 2014): 'four out of five payday loans are rolled over or renewed within 14 days'; 'the majority of all payday loans are made to borrowers who renew their loans so many times that they end up paying more in fees than the amount of money they originally borrowed'; 'based on data from a 12-month period with more than 12 million storefront payday loans' · Checked October 31, 2026

10. According to the CFPB, before taking out a payday loan there may be strategies that do not involve a loan: some employers, nonprofit organizations and community groups offer advances or emergency credit; there is help from family or friends; if you have a bank or credit union account, there may be less expensive alternatives, especially with a stable credit history, and a credit card may be another option; you can negotiate a smaller repayment with the creditor or collector; and if you expect a tax refund or more income, you can use it to start saving for the next emergency.

    Sources 2 · Should I get a payday loan if I need money now?, 'Choices': 'Some employers, nonprofit organizations, and community groups offer advances or emergency credit'; 'don’t forget about help from family or friends'; 'there may be less expensive alternatives available to you, especially if you have a stable credit history'; 'A credit card may also be another option'; 'negotiate with the creditor or debt collector'; 'think about using that money to start saving some money for the next emergency' · Checked October 31, 2026

11. According to the FTC, options that are less expensive and less risky than payday and car title loans include: asking your creditors for more time, and whether they will charge you for it; credit unions, which typically have lower rates, and some federal credit unions that offer 'payday alternative loans' (PALs), which are much less expensive; some state-chartered credit unions with similar loans; local banks and some large banks that offer small loans or lines of credit to customers with low or no credit scores; filing early if you expect a tax refund; a nonprofit credit counselor, free or low cost; help from family or friends; and charities and places of worship.

    Sources 9 · What To Know About Payday and Car Title Loans (FTC, October 2024), 'Possible Alternatives': 'Ask your creditors for more time to repay them'; 'find out if they'll charge you for that service'; 'Credit unions typically offer lower interest rates than banks or other lenders, and some federal credit unions offer'; '“payday alternative loans,” or “PAL loans,” for small loans'; 'PAL loans are much less expensive than payday or car title loans'; 'Some state-chartered credit unions offer loans similar to PAL loans'; 'Some large U.S. banks now offer small loans or lines of credit to customers with low or no credit scores'; 'If you think you might have a tax refund coming, file as soon as you can'; 'Non-profit groups in every state offer credit guidance to people for no or low cost'; 'Charities, churches, and other centers of worship often offer financial and other help at no cost' · Checked October 31, 2026

12. Under NCUA rules (12 CFR §701.21(c)(7)(iii)), a federal credit union may charge on a payday alternative loan (PAL I) a rate 1000 basis points above the maximum set by the NCUA Board, if it is closed-end credit and meets these conditions: the principal is $200 to $1,000; the term is one to six months; it makes no more than three PALs in a rolling six-month period to one borrower and no more than one at a time; it does not roll them over (though it may extend the term within the maximum with no added fees or credit); the loan fully amortizes; the borrower must be a member for at least one month; it charges a reasonable application fee reflecting actual costs and never more than $20; and it sets in its policies an aggregate limit on PALs and underwriting guidelines to minimize risk, such as requiring at least two recent pay stubs to verify employment.

    Sources 10 · 12 CFR §701.21(c)(7)(iii)(A)(1)–(8), 'Payday alternative loans (PALs I)': 'may charge an interest rate that is 1000 basis points above the maximum interest rate established by the Board'; 'closed-end credit'; 'not less than $200 or more than $1,000'; 'a minimum maturity of one month and a maximum maturity of six months'; 'does not make more than three payday alternative loans'; 'in any rolling six-month period to any one borrower'; 'more than one payday alternative loan'; 'at a time to any borrower'; 'does not rollover any payday alternative loan'; 'that does not include any additional fees assessed or extend additional credit'; 'fully amortizes the payday alternative loan'; 'a member of the credit union for at least one month'; 'reflects the actual costs associated with processing the application, but that in no case exceeds $20'; 'implements appropriate underwriting guidelines to minimize risk, such as, requiring a borrower to verify employment by providing at least two recent pay stubs' · Checked October 31, 2026

13. Under NCUA rules (12 CFR §701.21(c)(7)(iv)), on a PAL II the federal credit union may charge the same higher rate if it meets these conditions: the principal is no more than $2,000; the term is one to 12 months; it counts toward the same limit of three PALs in six months and one at a time; it is not rolled over; it fully amortizes; the application fee never exceeds $20; and the credit union cannot charge your account any overdraft-service fee, including a non-sufficient funds fee, in connection with the loan; and, unlike PAL I, the PAL II rule does not require one month of membership.

    Sources 10 · 12 CFR §701.21(c)(7)(iv)(A)(1)–(7), 'Payday alternative loans (PALs II)': 'The principal of the payday alternative loan is not more than $2,000'; 'a minimum maturity of one month and a maximum maturity of 12 months'; 'does not make more than three payday alternative loans'; 'does not rollover any payday alternative loan'; 'fully amortizes the payday alternative loan'; 'in no case exceeds $20'; 'does not assess a fee or charge, including a non-sufficient funds fee, on the borrower's account pursuant to the federal credit union's overdraft service'; compare (iii)(A)(6): 'requires the borrower to be a member of the credit union for at least one month before receiving a payday alternative loan provided under this paragraph (c)(7)(iii)' · Checked October 31, 2026

14. According to the NCUA, the Federal Credit Union Act generally limits federal credit union loans to a 15 percent rate, but the Board may set a temporary higher rate for up to 18 months; the Board extended the temporary 18 percent ceiling through September 10, 2027; and with that decision federal credit unions may still charge up to 28 percent on payday alternative loans, under the terms of the regulation.

    Sources 11 · Letter to Federal Credit Unions 26-FCU-02, Permissible Loan Interest Rate Ceiling Extended (February 2026): 'The Federal Credit Union Act generally limits federal credit unions to a 15-percent interest rate ceiling on loans'; 'the NCUA Board may establish a temporary, higher rate for up to 18 months'; 'extends the temporary 18-percent interest rate ceiling through September 10, 2027'; 'You may still charge up to 28 percent on payday alternative loans under the terms and conditions specified in NCUA’s regulations' · Checked October 31, 2026

15. According to the NCUA on MyCreditUnion.gov, before a payday loan you can ask your credit union or bank about cheaper alternatives, negotiate more time with creditors, borrow from family or friends you trust, shop for lower-cost credit, ask your employer for an advance or ask your state or local government about emergency assistance programs; payday lenders must disclose the APR before you sign, and a $100 loan with a $15 fee due in two weeks equals an APR of 391%; if you have been a credit union member for at least one month, you may be able to get a PAL; many state-chartered credit unions offer similar products; federal credit union loans that are not official PALs can have a maximum APR of 18%; some credit unions offer free financial counseling to members; and some online lenders use the 'payday alternative loan' name without being credit unions, so read the fine print.

    Sources 12 · Payday Alternative Loans (MyCreditUnion.gov, modified February 4, 2025): 'ask about less expensive alternatives available to you'; 'Talk with your creditors to negotiate more time to pay bills'; 'Consider borrowing from family or friends you can trust'; 'Inquire about an advance from your employer'; 'Contact your state or local government to see if any emergency assistance programs are available'; 'payday lenders must disclose the annual percentage rate (APR) to you before you sign a loan agreement'; 'is the same as an APR of 391%'; 'If you have been a credit union member for at least one month'; 'Many state-chartered credit unions offer products similar to PALs'; 'Federal credit union loans that aren’t official PALs can have a maximum APR of 18%'; 'Some credit unions also offer free financial counseling services to their members'; 'sometimes the lender isn’t a credit union' · Checked October 31, 2026

16. According to the CFPB, active-duty servicemembers and their dependents have Military Lending Act (MLA) protections that cover payday and vehicle title loans, among others: they cannot be charged more than a 36% Military Annual Percentage Rate (MAPR), which includes finance charges, credit insurance and add-on products; they cannot be required to accept mandatory arbitration or a military allotment; there is no prepayment penalty; and they can ask their legal assistance (JAG) office for help.

    Sources 13 · What is covered under the Military Lending Act? (reviewed July 27, 2023): 'Payday loans, deposit advance products, and vehicle title loans'; 'You can’t be charged more than a 36% Military Annual Percentage Rate (MAPR)'; 'Finance charges'; 'Credit insurance premiums or fees'; 'Add-on products sold in connection with the credit'; 'A creditor can’t require you to submit to mandatory arbitration'; 'A creditor can’t require you to create a military allotment'; 'A creditor can’t charge a penalty if you pay back part – or all – of the loan early'; 'you should contact your closest legal assistance (JAG) office' · Checked October 31, 2026