A payday loan is a type of short-term borrowing where a lender will extend high-interest credit based on a borrower’s income and credit profile. A payday loan’s principal is typically a portion of a borrower’s next paycheck. … These loans are also called cash advance loans or check advance loans.
These types of loans are designed to keep the cash flow deficit spirally out of control for those who are the most venerable to fiscal crunches.
Payday loans prey upon those who find themselves in a tough spot and in desperate need of cash. While these services are legal the costs far outweigh the benefits.
These rates are typical of the industry:
| Finance fee | APR |
| $15 – $35 loan fee for $100 short term personal loan | 391% – 851% |
| $33 fee on $100 bounced check | 860% |
| $37 late fee for $100 credit card balance | 965% |
| $20 – $45 reconnect/late fee for $100 utility bill | 521% – 1,173% |
I personally consider these rates to be beyond predatory, but apparently, they are legal.
There are specific products and services that target the people who can least afford to use them.