Payday loans and other expensive traps
A payday loan is a small, short-term loan due on your next payday, and it's very expensive. The CFPB says a common $15 fee per $100 works out to an APR of almost 400 percent on a two-week loan.
You'll need
- The bill you're trying to cover
- Your lender's or biller's phone number
What to know
- Do the math first. The CFPB's example: borrowing $300 with a $15-per-$100 fee costs $345 to pay back (CFPB).
- Call whoever you owe and ask for more time or a payment plan.
- Ask a bank or credit union about a small loan before going to a payday lender.
- If you do take one, borrow only what you need and plan exactly how you'll repay it on the due date.
Watch out. These loans are usually due in one lump sum on your next payday (CFPB). If you can't cover it then, the fees can pile up fast.
See it done
Payday LoansKhan Academy
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Good to know
Where to learn more
The CFPB's payday loans page explains how these loans work and what to ask.
Compare with a card
Even a high credit card APR is far below a payday loan's. See APR and interest in plain English.
A cushion is the real fix
A small emergency fund is what keeps you away from these loans next time (CFPB).
Sources
- Consumer Financial Protection Bureau What is a payday loan?
- Consumer Financial Protection Bureau What are the costs and fees for a payday loan?
- Consumer Financial Protection Bureau Payday loans
Lesson M5.5 · Last checked October 2, 2026 against the sources listed. See a mistake?
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