• Short-term, high-cost loans designed to last until payday Also called “cash advance” or “deferred deposit” loans Often made at a check cashing outlet
• Effective interest rates often several hundred percent APR or higher

High-cost debt can hasten, rather than relieve, family financial ruin. Payday loans shift family income from basic necessities to loan fees. With their high fees and non-declining balance, payday loans can turn financial strain into financial chaos. Payday loans do not provide one-time help. The average “payday borrower” takes out 11 loans a year, according to an industry study. Payday lending encourages consumers to write “hot” postdated checks.

A payday loan is a loan, not a service. State and federal courts consistently find that payday loan transactions are credit transactions.

• Payday Lender Survey - U.S. PIRG, February 2000 Safe Harbor for Usury - CFA, September 1999 The Growth of Legal Loan-Sharking - CFA, November 1998
• Interest rates charged by payday check stores as high as 1826% on a $100 loan - Bankrate.com, Feb. 19, 1998