A payday lender should be at the top of the list of any type of small loans to avoid. Interest rates can start at 400%, they’re due in 15 or 30 days, and your next paycheck is used as collateral if you don’t pay. The image below shows just how expensive a payday loan can be in each state. Some studies show that almost half of the consumers who accept payday loans end up in default. That can lead to a much higher amount due. A payday loan of $2,500 can lead to more than $50,000 of debt after default fees and penalties are included, as one unlucky couple discovered. In February 2021, the Federal Trade Commission announced a settlement with a payday lending enterprise the FTC said overcharged consumers millions of dollars by withdrawing money repeatedly from consumers’ bank accounts without their permission. The bank withdrawals were done long after the loans’ original principal amount and stated repayment cost had been repaid, and didn’t stop until consumers closed their bank accounts or found some other way to cut off payments. The 11 defendants operated under the names Harvest Moon Financial, Gentle Breeze Online, and Green Stream Lending. The FTC said they used deceptive marketing tactics to convince people that their loans could be repaid in a fixed number of payments.