A $15 fee on $100 sounds small. It is not.
Payday loan fees are typically quoted as a flat dollar amount per $100 borrowed. This makes the cost sound small, but when annualized, a $15-per-$100 fee for 14 days equals roughly 391% APR. With rollovers, the total cost can exceed the original loan amount.
How payday loan fees work
$10–$30 per $100 borrowed
Most states allow fees between $10 and $30 per $100. The national average is about $15 per $100 for a two-week loan. On a $400 loan, that is $60 in fees.
Fees multiply every 2 weeks
If you cannot repay in full on the due date, you pay another $60 fee to extend for two more weeks. After 3 rollovers, you have paid $240 in fees on a $400 loan — and still owe the original $400.
$400 loan, 10 weeks = $700+ total
Borrowing $400 for 10 weeks (5 two-week periods) at $15/$100 costs $300 in fees. Total repayment: $700. You paid 75% of the loan amount in fees alone.
Credit card: $400 for 10 weeks = ~$19
The same $400 on a credit card at 25% APR for 10 weeks costs about $19 in interest ($400 × 0.25 × 70/365). The payday loan fee is roughly 16x more expensive for the same amount and time.
Fees beyond the stated rate
Bank overdraft from ACH debit
If the lender's ACH debit hits your bank account when the balance is too low, your bank charges a $25–$35 overdraft fee on top of the loan fee.
Additional charges for non-payment
Some lenders add late fees or returned-check fees if the automatic payment fails. These are in addition to the original finance charge.
New fee every extension period
Each rollover requires paying the full finance charge again without reducing the principal. The loan balance stays the same while fees accumulate.
Fee examples are illustrative and based on typical industry rates. Actual fees vary by state and lender. Verify all terms before signing a loan agreement. Source: CFPB.