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Personal Finance Courses: Predatory Lending

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1.
The interest rates of payday loans are very high.
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True. Payday loans have average annual interest rates of 500 percent--or more.
2.
If you roll over a payday loan three times, you will be charged a new fee each time.
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True. You will be charged a new fee for each rollover.
3.
You can get a short-term loan from your checking account through what is called _______.
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Overdraft protection. Overdraft protection simply means overdrawing your checking account. You will likely be charged a fee for it.
4.
The interest rates on payday loans are _______.
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Higher than those of banks or credit unions. Interest rates on payday loans are generally much higher than those of other loans.
5.
Although people who take out payday loans use them for many different purposes, what is the most common use?
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Regular living expenses. Most borrowers use payday loans for regular living expenses.