Payday loans, while marketed as a quick and easy solution to financial emergencies, can be incredibly dangerous for low-income earners. These loans often come with predatory rates and terms that can trap borrowers in a cycle of debt.
Payday loans are short-term loans that are designed to be repaid on the borrower's next payday. These loans are often marketed as a way for people to get quick access to cash in emergencies, such as unexpected car repairs or medical bills. However, the rates and fees associated with payday loans can be incredibly high, making them difficult for low-income earners to repay.
One of the biggest dangers of payday loans for low-income earners is the high-interest rates and fees associated with these loans. Payday loan interest rates can be as high as 400% APR, which is significantly higher than the rates charged by traditional lenders or earned wage access providers. This means that low-income earners who take out payday loans may end up paying back much more than they borrowed, even if they make their payments on time.