Test your knowledge

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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.

Paying off payday loans on time, every time, is a great way to build up your credit score.

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True

False

False. Payday lenders do not report your borrowing activity to the three big credit bureaus, so the activity will not influence your credit score.

As a general rule, which of the following will charge the LEAST amount of interest if you take out a loan?

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A payday lender

A credit card

A credit card cash advance

A loan from a bank or credit union

A loan from a bank or credit union. As a rule, these loans have the lowest interest rates and charge the least amount of interest.

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.

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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