Definition
A small, short-term loan due on your next payday, typically $100-1,000, with fees that work out to triple-digit annual rates, often 300-400% APR or more. It is among the most expensive legal ways to borrow, and many borrowers roll one loan into the next.
Why it matters
The fee looks small, $15-30 per $100 borrowed, but on two-week terms it repeats into a cycle where fees quickly exceed the original loan. Calmer routes for the same gap usually exist: a payment plan with the biller, a small credit union loan, an employer paycheck advance, or an emergency fund built in easier months.
Example
Borrowing $400 for two weeks costs a typical $60 fee. Unable to repay in full, the borrower rolls the loan over six more times, paying $420 in fees across roughly three months while still owing the original $400.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.