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The interest rates on payday loans are _______.

Higher than those of banks or credit unions

Lower than those of banks or credit unions

Normal

Higher than those of banks or credit unions. Interest rates on payday loans are generally much higher than those of other loans.

The interest rates of payday loans are very high.

True

False

True. Payday loans have average annual interest rates of 500 percent--or more.

When you take out a payday loan, how long is the grace period for paying it back?

Two weeks

One month

Two months

There is no grace period.

There is no grace period. Payday loans do not offer grace periods; you must pay them back on your payday or you will be charged late fees.

How might a payday loan affect your credit report?

If you don't pay the loan back, it could get turned over to a debt collector.

You could get sued if you don't pay the loan back.

Small credit reporting agencies might put your payday loan on a credit report.

All of the above

All of the above. The big three credit reporting agencies don't put payday loans on your report, but there are other ways that the loan activity could show up on your report.

What is a typical fee on a payday loan?

15%

50%

100%

15%. Fee rates range from 15-20% of the amount borrowed.