Payday Loan and Overdraft Fees Are Unnecessarily High

Pew letter highlights research-based strategies to reduce costs, preserve access to credit

Payday Loan and Overdraft Fees Are Unnecessarily High

On April 11, 2022, The Pew Charitable Trusts submitted a letter to the Consumer Financial Protection Bureau on so-called junk fees, such as costs to borrow small amounts of money, that are not just high, but unnecessarily high. As the letter explained, because payday lenders compete on speed and ease of access to credit and not on price, they tend to charge the maximum fees allowed in each state, inflating prices and harming consumers. But data shows that when fees are curtailed, credit remains widely available.

Pew’s letter also summarized a decade of research on consumer experiences with overdraft and high-cost small loans showing that to reduce prices and deliver better outcomes for consumers, policies must focus on limiting costs, not merely on improving disclosure practices.

Pew also highlighted recent positive market changes. Payday loan reforms in several states have driven down prices and increased transparency. And some of the nation’s largest banks have eliminated non-sufficient funds fees and reduced overdraft fees while also expanding small installment loans and lines of credit, a two-fold approach that protects consumers and increases the availability of safe and affordable credit.

America’s Overdose Crisis
America’s Overdose Crisis

America’s Overdose Crisis

Sign up for our five-email course explaining the overdose crisis in America, the state of treatment access, and ways to improve care

Sign up
Quick View

America’s Overdose Crisis

Sign up for our five-email course explaining the overdose crisis in America, the state of treatment access, and ways to improve care

Sign up
Article

37 Scientists Pioneering the Future of Biomedical Research

Quick View
Article

Biomedical researchers are at the heart of nearly every medical advancement. From cutting-edge cancer treatments to breakthrough discoveries about emerging viruses, these scientists use creativity and ingenuity to explore new horizons in human health and medicine. And for nearly 40 years, The Pew Charitable Trusts has supported more than 1,000 early-career researchers committed to this work.

Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics

Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?