Durham, N.C. — The Center for Responsible Lending (CRL) and its Julian Bond Institute (JBI) today released new research, “The Cost of Payday Loan Apps in Your State,” with state-specific data demonstrating very high costs and rates of reborrowing. CRL illustrates this information through an interactive map as well as factsheets for all 50 states, DC, and nationwide.

“Our state-by-state data show that payday loan apps charge triple-digit interest rates and rely on people taking out dozens of loans a year to generate most of their fees,” said Christelle Bamona, senior researcher at CRL and co-author of the analysis. “This business model should concern policymakers. To protect consumers, strong interest rate caps must be applied to these predatory loans.”

CRL’s analysis was based on a large, anonymized dataset showing bank account transactions for nearly 347,000 borrowers of payday loan apps (which are often marketed as “Earned Wage Advances”).

Based on a nationwide sample of these borrowers, CRL found the following about direct-to-consumer payday loan apps:

  • The annual percentage rate (APR) of the average loan is 232%
  • 96% of loans had fees, including fees disguised as “tips”
  • 82% of fees were extracted from people with 25+ loans a year

The analysis also found the following about all payday loan app advances (those from employer-based and from direct-to-consumer lenders):

  • 42% of loans were smaller than $100
  • On average, borrowers took out 33 loans a year

Background

The interactive map displaying this research categorizes state law for payday loans. App-based payday lenders have been charging triple-digit interest rates even in states that prohibit lending at those rates. Some state and local governments have sued companies for violating their usury laws as documented in CRL’s Litigation Tracker. As shown in the map, some states have exempted payday loan apps from consumer protection laws.

The U.S. House of Representatives Committee on Financial Services has voted to send to the full House a bill that would exempt these companies from state and federal laws that prohibit usury, discrimination, hiding costs, and overcharging military servicemembers.

To view the analysis released today, go to: “The Cost of Payday Loan Apps in Your State.”

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Press Contact: Matthew Kravitz matthew.kravitz@responsiblelending.org