Test your knowledge

Choose wisely. There is only one correct answer to each question.

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The interest rates on payday loans are _______.

Choose wisely. There is only one correct answer.

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.

How might a payday loan affect your credit report?

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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.

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

Emergencies

College tuition

None of the above

Regular living expenses. Most borrowers use payday loans for regular living expenses.

If you take out $1000 from a payday lender, a credit card, and a credit card cash advance, which will charge the most interest?

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The payday lender

The credit card

The credit card cash advance

The payday lender. By far, the payday lender will charge the most interest. The dollar amount difference between it and the credit cards will be immense. It should be noted that there are also options that are even lower in interest than the credit cards.

To qualify for a payday loan, what must your income be?

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$100 per week

$300 per week

There is no minimum.

There is no minimum. You just need to earn sufficient money to cover the loan.

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