How Many Americans Use Payday Loans? 

Payday loans are more common than many people realize. Around 12 million Americans use them each year. That’s about 1 in 20 adults. 

According to the Consumer Financial Protection Bureau (CFPB), 4.7% of U.S. households reported using a payday loan in 2023. Usage rose slightly from 2022 and has returned to pre-pandemic levels. 

Most borrowers take out more than one loan per year. In some states, the average borrower takes out 5 to 10 payday loans annually, often just to keep up with the payments from earlier loans. 

Payday lending is legal in 27 states under standard terms, while 9 additional states allow restricted forms of short‑term lending. In the states where payday loans are allowed without meaningful APR caps, annual interest rates often fall in the triple‑digit range.  

Es un hecho: In 2022, payday loan borrowers in states that allow high-cost lending took out over 20 million loans totaling more than $8.6 billion—and paid an estimated $2.4 billion in fees.

source: Center for Responsible Lending 

Typical Payday Loan Amounts and Fees

Payday loans are small—but expensive. Most borrowers take out just a few hundred dollars, but the fees and interest can cost far more than the loan itself. 

• In many states, the average payday loan is less than $500.  
• Lenders often charge a flat fee of $15–$20 per $100 borrowed. 
• While that might not sound like much, it adds up fast. A two-week loan with a $15 fee per $100 borrowed equals a 391% APR. 

Example: If you borrow $300, you might owe $345 just 14 days later. 

In states without strong lending laws, payday lenders can charge triple-digit APRs legally. In contrast, states that cap interest at 36% APR or lower have largely eliminated payday lending. 

The Payday Loan Cycle: Repeat Borrowing and Debt Traps 

Payday loans are often marketed as short-term help for one-time emergencies. But most borrowers don’t use them that way. Instead, they take out loan after loan—just to keep up with the last one. 

• About 80% of payday loans are followed by another loan within two weeks 
• Only 15% of borrowers repay without borrowing again quickly 
• Around 1 in 5 borrowers defaults, often after a string of renewals 

In many cases, borrowers don’t have enough cash to pay off the full amount by the due date. So they take out another payday loan—sometimes the same day. This leads to a cycle of debt that can last for weeks or months. 

Es un hecho: Borrowers who take out 10 or more loans in a year generate nearly 75% of all payday loan fees

source: CFPB Payday Loan Study 

How People Use Payday Loans 

Most people who turn to payday loans are already under financial strain. They’re often working full time but still struggling to cover basic needs. A short-term loan might seem like a quick fix, but it can add to the stress. 

Here’s what the data shows about how people use payday loans: 

• 70% of borrowers use payday loans to cover recurring necessities like rent, utilities, groceries, and transportation—not for sudden emergencies 
• About 16% of payday loans are taken to handle unexpected expenses, such as vehicle breakdowns or medical costs 

Payday loan users aren’t typically unemployed—they’re often working adults with limited savings. When money runs short, they may have no other option.

Es un hecho: Payday borrowers spend, on average, five months per year in debt—even though most loans are supposed to be two‑week emergencies

source: Pew Charitable Trusts 

Who Uses Payday Loans?

Payday loans are used by people from many walks of life, but they’re most common among adults with lower incomes, limited savings, and few affordable credit options.  

• Income: In 2023, about 10% of adults earning under $25,000 and 10% of those earning $25,000 to $49,999 used a payday, pawn, or auto-title loan. Usage dropped to 5% among those earning $50,000 to $99,999, and just 2% among adults earning $100,000 or more.  

• Employment: Most payday loan borrowers are employed. About 81% work full time, and nearly all have some form of income. 

• Age: Usage is highest among adults in their 20s and 30s. About 7% of adults ages 18–29 and 9% of those 30–44 reported using a small-dollar loan in the past year. 

• Race and Ethnicity: Black and Hispanic adults are three times more likely to use payday loans than white adults. In 2023, 10% of Black adults and 11% of Hispanic adults used one, compared to 3% of white adults. 

• Gender: Men and women both use payday loans, though some studies show women are slightly more likely to borrow. 

Payday loans are especially common in jobs with modest pay and inconsistent hours, such as retail, food service, office support, and home health care. These borrowers often face tight budgets, rising costs, and limited access to traditional credit. 

Es un hecho: In states with few lending protections, payday loan fees cost nearly four times as much as safer installment loans.

source: Pew Charitable Trusts 

Alternatives to Payday Loans

If you’re thinking about a payday loan, it’s worth checking out other options first. Many of them cost less and give you more time to repay. 

Here are a few alternatives to consider: 

• Payment plans: Talk to your utility provider, landlord, or medical office. Many offer payment plans that let you catch up over time without late fees or disconnection. 

• Credit unions: Some credit unions offer small-dollar loans with lower fees and interest. These are often called Payday Alternative Loans (PALs) and are available to members. 

• Local nonprofits and charities: Community organizations may offer emergency help with rent, food, or utility bills. You can also try 2-1-1 to find nearby resources. 

• Lending circles: In some communities, people form lending circles where each member contributes a set amount, and one person gets the full pot each month. These are often organized by nonprofits and can help build credit. 

• Small personal loans: If your credit is okay, you might qualify for a personal loan from a bank, credit union, or online lender. These loans usually have fixed payments and more time to pay them back. 

Not every option will work for everyone, but many are safer and more affordable than payday loans. A little research now could save you a lot of stress later. 

Es un hecho: Credit unions issued $227 million in Payday Alternative Loans (PALs) in 2022—a 30% increase from their previous high.

Pew Charitable Trusts