Payday loans, high-cost small loans averaging $350 that usually must be repaid in a single payment after two weeks, are designed to create a long-term debt trap for consumers. A 36% annual percentage rate (APR) cap on payday loans (including fees) is the best way to stop the cycle of debt.

To date, 20 states and the District of Columbia have passed laws to cap payday lending rates around 36% APR or require other measures to ensure that payday lenders do not impose interest rates and financing terms that create a long-term debt trap for consumers.

Since 2005, no state has authorized the expansion of traditional storefront payday lending. States must continue to enact strong consumer protections, such as a maximum 36% APR rate cap, to end the payday debt trap.