Payday Loans
This is a warning page. Payday loans are one of the most expensive ways to borrow money. They are designed to be repaid on your next paycheck, but many people get trapped in a cycle of fees that is hard to escape.
What Is a Payday Loan?
A payday loan is a very short-term loan, often for a few hundred dollars, meant to last until your next paycheck. The lender charges a fee, and you repay the loan quickly, usually in one payment.
The simple version:
You get cash today, but you give back much more money very soon.
Why Payday Loans Are Dangerous
Payday loans often have very high costs compared to other loans. Even when the fee looks small, the cost can be huge when you convert it into a yearly rate.
If you cannot repay it fully on payday, the lender may offer to roll it over or extend it. That usually means more fees, and your debt can last much longer than you planned.
Borrowing to cover basic bills usually means there is already a cash flow problem
Fees repeat each time you roll the loan forward
Repaying the loan can leave you short again, causing another loan
Many borrowers end up paying more in fees than the original amount borrowed
How the Debt Cycle Happens
- 1. You are short on cash before payday.
- 2. You take a payday loan to get through the week.
- 3. On payday, you repay the loan plus fees.
- 4. Now your paycheck is smaller, so you are short again.
- 5. You take another loan, and the cycle repeats.
Teen friendly translation:
A payday loan fixes a problem for a few days, then makes the next payday worse.
Better Options to Try First
Talk to a trusted adult, family member, or counselor before you borrow
Ask the bill provider about a payment plan, hardship plan, or due date change
Cut non-essentials temporarily to stop the cash leak
Look for community help: local non-profits, school resources, or assistance programs
If you are an adult: consider a credit union small-dollar loan instead of payday lending
Do not take a second payday loan to pay the first. Ask the lender for a repayment plan, and ask a trusted adult for help making a plan. The goal is to stop the cycle quickly.
Key Takeaway
Payday loans are a last-resort warning sign. They are expensive, they can trap people in repeated fees, and they often make next month harder, not easier. If you are thinking about a payday loan, pause and get help finding a safer option.