Need cash
Payday loans, explained honestly
The short answer
It's a short-term loan against your next paycheck.
- A common fee is about $15 for every $100 you borrow, due in two weeks.
- That fee works out to a yearly rate near 400%.
- The rollover cycle is the real danger, not the single fee.
- The catch: most borrowers re-borrow, and the fees can pass the original loan.
How a payday loan works
You borrow a small amount now. To get it, you authorize a debit from your account, or you leave a post-dated check. That covers the loan plus the fee.
The whole thing is due on your next payday, about two weeks out. If you can't cover it then, you roll it over for another fee. The balance stays put, but the cost keeps climbing.
Put a real number on the fee
$15
Fee per $100 borrowed
a common charge
≈400%
That fee as a yearly rate
on a two-week loan
$0
What the cheaper moves cost to try
try these first
Illustrative example. Actual rates and terms vary. Run your own numbers →
⚠ The rollover cycle
Say you borrow $100 and owe $115 on payday. If paying that back leaves you short on rent, you roll the loan for another $15. Then again the next payday.
The fees stack while the balance doesn't move. That's how a two-week loan becomes months of fees.
✓ A payday loan makes sense only if
- It's truly one-time, with a known cause.
- You can repay it in full on payday.
- Every cheaper option turned you down first.
✕ Skip it if
- It's covering regular bills.
- You're likely to roll it over.
- An advance, a fee-free account, or a credit-union small-dollar loan is available.