Because they are! While some states ban payday loans altogether, others place a cap on the interest rate that payday loan companies can charge.
But the maximum rate is very high. For example, a payday loan in California could cost you as much as 459% per year. The rates in many other states are equally high.
Of course, that’s the annual rate. The loan term for a payday loan is usually two weeks. But a rate of 450%+ is still very high considering that credit cards charge an average of 17% and personal loans are available from 10% to 28%.
