The Truth About Payday Lending

More than twelve million hardworking American men and women fall victim to the underhanded business practices of payday lenders every year. It’s an industry that takes in more than $54 billion dollars annually by deliberately trapping customers in a cycle of debt that is, by design, difficult to escape. That’s why the Consumer Financial Protection Bureau (CFPB) is working to impose strong new rules that protect consumers. The facts speak for themselves:


  • Thirty-Five States Allow Payday Lending With An Average Of 300% APR Or More On A Two Week Loan. [Philadelphia Inquirer, 6/23/13]
  • 80% Of Payday Loans Are Rolled Over Into New Loans Within 14 Days. [Yahoo Finance, 8/13/14]
  • 20% Of New Payday Loans Cost The Borrowers More Than The Amount Borrowed. [Yahoo Finance, 8/13/14]
  • An Average Payday Loan Claims A Third Of A Borrower’s Next Pay Check. [Cleveland Plain Dealer, 6/13/14]
  • Half Of All Borrowers Took Out At Least 10 Sequential Loans. [Cleveland Plain Dealer, 6/13/14]
  • 60% Of Payday Loans Are Renewed Seven Or More Times In A Row, Typically Adding A 15% Fee For Every Renewal. [Times Picayune, 5/8/14]
  • The Average Payday Loan Customer Spends Two-Thirds Of The Year In Hock To The Payday Lender. [St. Louis Post Dispatch, 6/18/14]
  • 22% Of Monthly Borrowers, “Largely People Whose Income Is From Social Security”, Remained In Debt For An Entire Year. [Cleveland Plain Dealer, 3/26/14]
  • Only 15% Of Borrowers Were Able To Repay Their Initial Loans Without Borrowing Again Within Two Weeks. [Cleveland Plain Dealer, 3/26/14]
  • Three Quarters Of Loan Fees Came From Borrowers Who Had More Than 10 Payday Loans In A 12-Month Period. [Cincinnati Enquirer, 8/11/13]


Payday Loan Employee: “We Just Basically Don’t Let Anybody Pay Off.” [Cincinnati Enquirer, 8/11/13]
Dan Feehan, CEO Of Cash America: The Theory Of Payday Lending Is “You’ve Got To Get That Customer In, Work To Turn Him Into A Repetitive Customer, Long-Term Customer, Because That’s Really Where The Profitability Is.” [New York Times, 9/17/13]


  • ACE Cash Express Used False Threats, Intimidation, And Harassing Calls To Bully Payday Borrowers Into A Cycle Of Debt. [Los Angeles Times, 7/11/14]
  • Lenders Have Been Known To Harass Borrowers At Work, Take Money Directly Out Of Their Bank Accounts And Threaten To Have Them Arrested. [Yahoo Finance, 8/13/14]
  • ACE Cash Express Used Illegal Tactics Including Harassing Phone Calls And False Threats To Report Borrowers To Credit Reporting Companies To Try And Force Them To Take Out New Loans To Pay Off The Old Ones. [Los Angeles Times, 7/11/14]


  • Numerous States Have Imposed Regulation on Payday Lending
    • 24 States Have Imposed Interest Rate Caps Or Restricted Payday Lending Altogether. [Yahoo Finance, 8/13/14]
  • But Payday Lenders Have Found Ways Around the Regulations
    • Payday Lenders Have Gotten Around Regulations By Declaring Themselves Credit Service Organizations Or Issuing Car Title Loans Instead. [Cleveland Plain Dealer, 6/17/14]
  • In Ohio, Lenders Ignored Rate Caps And Continued To Issue Payday Loans Under Mortgage Or Other Lending Licenses That Were Never Created For That Purpose. [Cleveland Plain Dealer, 6/13/14]
    • Payday Lenders Continued To Charge Triple Digit Interest Rates On Loans In Ohio By Becoming Licensed As Mortgage Or Credit Organizations. [Cleveland Plain Dealer, 6/12/14]
    • The Ohio Supreme Court Upheld Payday Lenders Ability To Continue To Do An End-Run Around Payday Lending Laws. [Cleveland Plain Dealer, 6/12/14]
  • Many Payday Lenders Have Created New Products That Aren’t Scrutinized To The Extent Of Payday Loans But Still Have Interest Rates Between 300%-700% Including Lines Of Credit, Auto-Title Loans, And Installment Loans. [Cincinnati Enquirer, 8/11/13]
  • Cincinnati Enquirer: “Lenders Can Adapt Their Products With Surprising Alacrity” And When Payday Loans Are Regulated In A State They Turn To Different Kinds Of Loans Such As Installment Loans That Are Longer Term But With Triple Digit APR’s. [Cincinnati Enquirer, 8/11/13]

Special thanks to National People’s Action for allowing Allied Progress to use its extensive research on the payday lending industry.

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