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. A 36% annual interest rate cap on payday loans (inclusive of fees) most effectively stops the cycle of debt.

Currently 18 states and the District of Columbia have enacted rate caps of 36% or less. Since 2005, no new state has authorized high-cost payday lenders. States can and must continue to enact strong protections, such as a rate cap of 36% annual interest or less, to stop the payday debt trap.