Yusra3
VIP Contributor
Payday loans are a controversial form of short-term, high-cost lending that should be approached with extreme caution. These small-dollar loans are meant to cover unexpected expenses until your next paycheck arrives.
However, payday loans come with exorbitantly high fees equating to triple-digit annualized interest rates, often in excess of 400% APR. If you're unable to repay the full amount plus fees by the typical 2-week due date, you'll be on the hook for additional fees that can quickly snowball into a crippling debt cycle.
Many states now enforce interest rate caps on payday lenders to curb predatory lending practices. But payday loans remain legal in the majority of U.S. states where over 12 million Americans turn to them annually, often out of desperation.
Before taking out a payday loan, explore all other possible options first for accessing cash including payment plans with billers, advances from employers, lending circles, or personal loans which have significantly lower interest rates. If unavoidable, establish a plan for prompt repayment to minimize costs. Payday loans should truly be an absolute last resort.
However, payday loans come with exorbitantly high fees equating to triple-digit annualized interest rates, often in excess of 400% APR. If you're unable to repay the full amount plus fees by the typical 2-week due date, you'll be on the hook for additional fees that can quickly snowball into a crippling debt cycle.
Many states now enforce interest rate caps on payday lenders to curb predatory lending practices. But payday loans remain legal in the majority of U.S. states where over 12 million Americans turn to them annually, often out of desperation.
Before taking out a payday loan, explore all other possible options first for accessing cash including payment plans with billers, advances from employers, lending circles, or personal loans which have significantly lower interest rates. If unavoidable, establish a plan for prompt repayment to minimize costs. Payday loans should truly be an absolute last resort.
