In the 30 states that allow payday lending, single-payment and payday installment loans drained more than $2.4 billion in fees in a single year from low-income borrowers. In 2022 alone, borrowers took out over 20 million loans, for a total of nearly $8.6 billion. Because reliable estimates of online payday lending volumes are not publicly available, these figures primarily reflect storefront lending, and the true cost of payday loans is likely significantly higher. Through storefronts and online, these predatory lenders continue to trap millions of Americans in debt and stifle economic growth in states without debt trap protections.
Payday loans are small loans, typically less than $500, with triple-digit interest rates—nearly 400% Annual Percentage Rate (APR) on average—that are usually due on the borrower’s next payday. These loans are repaid by a personal check held for deposit or, more commonly, electronic access to a bank account. Lenders market payday loans as quick cash to cover a financial emergency, but research demonstrates they often lead to a cycle of debt that is nearly impossible to escape. Due to the unaffordable and predatory nature of these loans, most borrowers end up reborrowing multiple times and paying more in fees than they originally received in credit.
This report provides an update on the economic impact of payday lending across states and builds upon previous reports by the Center for Responsible Lending, most recently, Debt Trap Drives the Fee Drain. It offers an updated calculation on fees payday loan borrowers pay in each state, as well as some other statistics on the payday loan industry compiled from data received from state regulators and other sources.
Press Contact: Matthew.Kravitz@responsiblelending.org