Some short-term loans cost over 20 times more in interest than the average credit card. And yet one in 10 Americans have used them.
These small-dollar advances, or payday loans, are available in most states: All you need to do is walk into a store with a valid ID, proof of income and a bank account. The balance of the loan, along with the "finance charge" (the service fees and interest), is typically due two weeks later, on your next pay day.
In the U.S. today, these loans are a $9 billion business. In the past two years, 11 percent of U.S. adults say they've taken out a payday loan, according to a recent survey of approximately 3,700 Americans that CNBC Make It performed in conjunction with Morning Consult.
But while payday loans provide quick cash, the national average annual percentage rate is almost 400 percent. In contrast, the average credit card APR in July was 16.96 percent, according to CreditCards.com.