STATES WHERE PAYDAY LOANS CHARGE UP TO 700% APR

All Americans use their credit card for everyday purchases. Did you know that some short-term loans cost 20 times more interest than the average credit card? Despite this, one in ten Americans used them.

These enticing small-dollar advances or Payday Loans are available in most states. To borrow such a loan is possible for almost any American.

Here is a simple way to do this:

1. walk into a store with a valid ID or apply online
2. confirm your income
3. confirm the existence of a bank account.

The balance of the loan and the "financial fee" (the service fees and interest) is usually paid in two weeks later, on your next day of payment.

Yes, payday loans provide quick cash, but the average annual interest rate across the country is almost 400 %. While the average credit card APR in July was 16.96 %. ² 

Everything happens very quickly. For example, if you want to take out a $500 payday loan with APR of 391%. After two weeks, you will need to return approximately $575. But don’t forget that the loan cycle doesn’t stop there. Many payday loan borrowers "roll over" the loan several times. Do that for three months and the amount of debt is more than $1,000.

"It is absolutely normal to get caught in a payday loan. It's the only way the business model works. A lender is not profitable until the customer has renewed or re-borrowed the loan (between four and eight times)," says Nick Burke, director of consumer finance at Pew Charitable Trusts³ , tells CNBC.

Many believe that this type of loan is a potential financial trap for borrower. In this regard, 15 states and the District of Columbia have laws that limit the APR to 36% or less, according to the Center for Responsible Lending⁴ . 

However, 35 other states are far more lenient. Not long ago, the Governor of Ohio signed a new law that goes into effect in October. This law should limit the state's APR for payday loans to 60%.

Ohio currently has the highest payday loan rates in the U.S. The average interest rate is 667%! The averages in Utah, Nevada, Texas, Idaho and Virginia are nearly as high.

Where payday loan rates are the highest:

For those who have overdue payday loan costs can be substantial and long-term. Some payday lenders try to get their money back in very aggressive ways. For example, to take money directly from current accounts of borrowers. This option is possible because borrowers provide access to their accounts as a condition of the loan. These unexpected withdrawals by lenders can seriously damage the credit scores of borrowers.

In addition, it can be difficult for borrowers to save while paying off such high-cost loans.

"Payday loans are dangerous and unaffordable for everyone! However, borrowers who are just starting out or who are struggling financially are the most vulnerable," Lisa Stifler, the deputy director of state policy for the Center for Responsible Lending, tells CNBC Make It.

Not to get into trouble borrowing a Payday Loan use reliable comparing services and choose the most verified lenders with the lowest interest rates and fees.