A Cost Comparison of the Alternatives

Consumer groups and academic researchers agree: Payday advance fees are lower than many of consumers’ alternatives, even when expressed as an annual percentage rate (APR).


Jonathan Zinman, Dartmouth College: “Most substitution seems to occur through checking account overdrafts of various types and/or late bills. These alternative sources of liquidity can be quite costly in both direct terms (overdraft and late fees) and indirect terms (eventual loss of checking account, criminal charges, utility shutoff).”

Sheila Bair, Former Chair, Federal Deposit Insurance Corporation (FDIC):
“When used on a recurring basis for small amounts, the annualized percentage rate for fee-based bounce [overdraft] protection far exceeds the APRs associated with payday loans.”

FDIC: “…a customer repaying a $20 POS/debit overdraft in two weeks would incur an APR of 3,520 percent; a customer repaying a $60 ATM overdraft in two weeks would incur an APR of 1,173 percent; and a customer repaying a $66 check overdraft in two weeks would incur an APR of 1,067 percent.”

Coalition of 90 Consumer Groups:
“Unlike payday lending programs, the extraordinarily high APRs in fee-based overdraft programs are never disclosed as such, and none of the other consumer protections are provided. Moreover, fee-based overdraft programs are aimed at the very same customers that payday lenders are seeking…and the costs rival or exceed those of payday lending.”

Jean Ann Fox, Consumer Federation of America: "If a bank lends you $100 and charges you a $20 application fee -- and then you pay the money back in two weeks—that’s an annualized interest rate of 520 percent. It's worse than a payday loan."

Download Report (PDF)

1. Chart Sources: Community Financial Services Association of America;; Government Accountability Office;
2. "Restricting Consumer Credit Access: Household Survey Evidence on Effects Around the Oregon Rate Cap", Dartmouth College, Jonathan Zinman, Oct. 2008
3. "Low-Cost payday Loans: Opportunities and Obstacles", Annie E. Casey Foundation, May 2005
4. FDIC Study of Bank Overdraft Programs, Federal Deposit Insurance Corporation, November 2008
5. Comment letter to Board of Governors of the Federal Reserve System from 90 consumer group organizational signators, January 27, 2003
6. "Banks: 'Protection' Racket?" Business Week, May 2, 2005

Connecting With Our Communities

Managing household finances can be a daunting task. However, by using solid budgeting and savings techniques, you can accomplish major financial goals. In the Customer Resource Center, CFSA offers a variety of payday advance resources that support and encourage responsible lending practices, and highlight the vital role of our members’ stores in neighborhoods near you.

Forgot Username or Password?


Thanks for visiting the CFSA Web site. CFSA values you as a member and is constantly seeking new ways to enhance your membership experience. As such, the information in this section is restricted to members only. If you are a CFSA member, please enter your username and password. If you have forgotten your login info, send an e-mail to

Forgot Username or Password?


Here you will find an aggregate of industry research, comprehensive data, and benchmarking tools from the short-term lending industry. They cover all payday advance business areas – consumer demographics, media hits, the latest policy initiatives, among others. Click here to access to the partner's resource library.

Forgot Username or Password?

For Our Policymakers

CFSA works at the federal, state, and local levels educate legislators and regulators about the role of payday advances in the broader financial services arena. This section provides resources for policymakers who believe in access to credit, want to preserve financial options and ensure balanced, substantive consumer protections. Click here to enter the Policymaker Resource Library.