High-cost short-term credit (HCSTC) provides quick access to cash at very high interest rates. Payday loan costs are regulated at the state level — rates and caps vary significantly by state. Check your state attorney general website or the CFPB for current rules.
Why these loans are expensive even with the cap
A $200 loan for 30 days at the maximum rate costs $48 in interest — an APR of approximately 1,500%. Even with the cap, short repayment periods and high daily rates make these loans extremely expensive. Adding a high-cost loan repayment to a household already under financial pressure often makes the underlying problem worse.
Better alternatives to consider
- Credit union loans: member-owned cooperatives often offering lower rates than banks. Find a credit union at mycreditunion.gov
- CDFIs (Community Development Financial Institutions): affordable loans for people who struggle to access mainstream credit — find one at cdfifund.gov
- Employer salary advance schemes: some employers offer advances on wages at no cost
- Government assistance: if waiting for SNAP or other benefits to start, contact your local benefits office about emergency food or cash assistance
If you already have payday loan debt
Do not take out a further loan to cover an existing one. Contact the lender directly and ask for a repayment arrangement — CFPB rules require lenders to work with you in financial difficulty. If the original loan was unaffordable when granted, you may have grounds to submit a complaint to the CFPB at consumerfinance.gov/complaint.
General guidance only — not regulated financial advice.