Test your knowledge

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Keep studying!

Review your answers below to learn more.

You can get a short-term loan from your checking account through what is called _______.

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Overdraft protection

A checking account loan

A cash advance

Overdraft protection. Overdraft protection simply means overdrawing your checking account. You will likely be charged a fee for it.

A payday lender does not legally have to identify the fees charged to your payday loan.

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True

False

False. By law, a lender must spell out all fees to you in your contract.

How good does your credit need to be in order for you to take out a payday loan?

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Excellent

Very good

Average

It doesn't need to be good

It doesn't need to be good. You don't need good credit in order to get a payday loan. Many borrowers do not have good credit.

As far as loans go, payday loans are generally small.

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True

False

True. Payday loans are usually $500 or less, making them small.

The interest rates on payday loans are _______.

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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.

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