High Cost Credit Products

High cost credit products comes in various forms:

• Credit cards are a common form of high cost credit. When issuers rewrite agreements, revoke promotional offers and hit you with high fees your rates can go through the roof. Learn more about credit cards—the most common form of high cost credit.
• Payday loans are single payment small loans based on the lender holding the borrower’s personal check for future deposit. Loans cost 390 to 780% APR when lender charges fees of $15 per $100 repaid in two weeks. Click for a calculator.
• Car title loans are small loan secured by the title to the borrower’s paid-for-vehicle. Legal in less than half the states, title loans typically are due in full in one month and cost 300% APR plus additional fees. Learn more here.

• Refund anticipation loans are loans secured by taxpayers’ anticipated tax refund. RALs cost 50 to over 500% effective APR and are repaid in less than two weeks by deposit of tax refunds from the IRS. Read this report (by CFA and NCLC) called Big Business, Big Bucks.
• Overdraft loans are the most expensive service offered by banks to cover transactions on accounts that do not have adequate funds. These loans are most commonly triggered by small debit card transactions, costing households nearly $2 for every $1 they receive in credit. Click here to learn more about overdraft.
• Private Student Loans Nearly 50 percent of undergraduate private student loan borrowers fail to exhaust their low-cost federal student loans to finance their college education.
  - Families need help understanding college financing (PDF)
  - Low cost ways to fund your college education (PDF)
  - How to choose a private student loan (PDF)