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Here’s how much a risky payday loan could cost

If you need money fast, you may be tempted by a payday loan, a short-term, high-cost loan, generally for $500 or less, that is due close to your next payday. However, whether they’re offered by an online payday lender or a check-cashing store in your neighborhood, these loans come with steep costs that can be hard to recover from, and should be considered a last resort after you’ve exhausted all other options.

Payday loans are typically fast-cash for small amounts that must be repaid in a single payment. If they are not repaid in full by the due date, additional fees are typically charged and the due date is extended. This can lead to a vicious cycle of re-upping over and over again, incurring more fees each time.

As a result, payday loans increase the chance of bankruptcy.

Bank of America does not recommend using payday loans
  1. Pew Charitable Trusts Payday loan fact sheet
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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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