New research by the Julian Bond Institute, an initiative of the Center for Responsible Lending, confirms that in every state app-based payday loans carry triple-digit Annual Percentage Rates (APRs), and borrowers paid one or more fees (including fees disguised as “tips”) on the vast majority of payday loan app transactions. These payday loan apps trap borrowers in a cycle of debt, extracting the bulk of fees from borrowers with 25 or more loans a year.
Nationally, the annual percentage rate (“APR”) on the average direct-to-consumer app-based payday loan was 232%, similar to storefront payday loans. The overwhelming majority of these loans—96%—included fees or “tips.”
The loans commonly involve frequent repeat borrowing, as each loan depletes the next paycheck, with users taking an average of 33 such loans per year. As with storefront payday loans, most of the revenues are derived from borrowers trapped in a cycle of debt, extracting 82% of fees and “tips” from borrowers with 25+ loans a year. Nationwide, direct-to-consumer loans cost borrowers $207.85 a year in fees and “tips” on average.
Explore state-specific data on the cost and harms of app-based payday loans using the interactive map below. Hover your mouse cursor over any state to see key statistics, or click on a state for an in-depth factsheet. A factsheet of national figures is also available.
State by State: Cost of Payday Loan Apps
In the District of Columbia, the APR of the average direct-to-customer loan is 230%. On average, borrowers took out 51 loans a year. 98% of direct to consumer loans had fees, including fees disguised as "tips." 90% of fees were extracted from consumers with 25+ loans a year.
For purposes of this map, payday loans are defined as triple-digit APR, single payment short-term loans. These are costly loans repaid in a lump sum by your next payday - typically within 2 weeks, but sometimes weekly or monthly.
What States Can Do
- The best protection against the harms of payday lending is an interest rate cap of 36% APR or lower. States that have such protections should maintain and enforce them.
- With regard to enforcement, in states where industry has not obtained a carve-out from state credit laws, regulators and attorneys general must act to apply those laws to payday app loans. PLA industry practices raise potential unfair, deceptive, and abusive acts or practices claims (“UDAAP claims”), which many state financial enforcers can bring directly under state law — and all such enforcers can bring under federal law.
For more information, refer to "Nickel and Dimed: How Payday Loan Apps Drain Workers' Pay and How to Stop Them."
About the Data
Created using a large dataset of consumer bank transactions, this set of factsheets provides an update to the Payday Loan App State Toolkit from 2024. Data points shown in these factsheets about the percent of loans under $100 and the average number of loans per borrower are based on both direct-to-consumer and employer-based apps. Because employer-based apps' repayments and fees are collected through payroll deduction and not observable in our bank transaction dataset, data points about cost are based exclusively on analyses of direct-to-consumer apps: the sentence that describes the characteristics of an average loan, the APR of this average loan, total fees per year per borrower, the percent of loans that included fees, and the percent of fees extracted from borrowers across borrowing frequency.