But some things in life (usually) require actual cash, from credit card bills to auto loans to mortgage payments. If you don’t have the money to cover those payments, your accounts could slip into delinquency. Did you turn to a payday loan as a quick solution?

Once you’ve opened a payday loan, it can be exceptionally difficult to get rid of. Let’s take a look at how to get out of payday loan debt—and some alternatives to consider.

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What is a payday loan?

A payday loan is targeted at those who need fast cash before they receive their next paycheck. It’s typically a small loan (up to $500) with a repayment term within one month, based on your next payday. Interest rates are usually obscene, though some lenders may choose to instead charge a flat fee. You’ll have to repay the loan in full—including fees—by the due date.

These customer-unfriendly terms make a payday loan the last resort when you’re hard up for cash (we’ll cover some alternatives shortly).

Why payday loans are so hard to pay off

Payday loans tend to be hard to pay off because their rates and fees are so high. It’s not uncommon to see annual percentage rates between 300% and 400%. If you were to borrow $500 at 400% APR for two weeks, you’d pay around $77 in interest charges for that short span of time.

That’s quite a ding for such a short loan. But the real trouble comes if you end up unable to pay the loan in full by your next paycheck. In this case, you can often roll over your loan for another couple weeks by just paying the fee—but the extended period will again come with more fees. That $500 might cost around $154 by the end of a month (some states require lenders to extend a repayment plan without additional fees).

Failure to repay the loan before the due date can also result in late fees, further trapping you in a cycle of penalties that make it difficult to rid yourself of the payday loan.

How to get out of payday loan debt

Having one payday loan with sky-high fees isn’t ideal—but some folks may even find themselves juggling multiple payday loans. Here are some steps to consider if you’re carrying payday loan debt and are struggling to get free of it.

Take stock of current payday loans and stop borrowing more

The most important (and easier-said-than-done) step is to stop borrowing and digging yourself deeper. List every outstanding payday loan to clearly understand your payoff goals and budget properly. This should include your balance and due dates. The last thing you want is a surprise debit from your checking account to undermine your repayment schedule.

Paying down debt generally requires sacrifice. Money will feel tight, but ultimately, the aim is to free up your monthly finances in a big way.

Consolidate payday loans into a lower‑rate option

It’s typically not a good idea to borrow money to pay debts, but consolidating your debts can be an exception. If your credit score is solid (ideally 670 or above), you may have a couple options that can save you big, including:

• Installment loan: A personal loan has considerably lower fees than a personal loan. Use the lump sum you receive upon account opening to pay off your other loans, effectively combining multiple payday loans into one. You can then repay your new loan in months or years (depending on your specific term).
• Balance transfer credit cards: Many credit cards come with the ability to relocate other loans to their credit lines for a small fee (often 3% to 5% of the transferred amount). You can pay off your payday loans and instead be subject to much interest rates. Some credit cards offer new cardholders a 0% intro APR period for 15+ months.

Get help from a nonprofit credit counselor or DMP

It can be worth contacting a credit counselor. After a review of all your debts and an assessment of your budget, a debt management plan (DMP) may be recommended to you. If you qualify, a DMP will consolidate your monthly payments into one and charge far lower interest rates.

Alternatives to payday loans

If you need cash in a hurry, there are options much less costly than a payday loan.

Payday Alternative Loans

Those only needing a little bit of money, similar to what you’d get from a payday loan, can potentially qualify for a Payday Alternative Loan (PAL), offered by credit unions. To qualify, you must have been a credit union member for at least one month.

You can generally get between $200 and $1,000 with a repayment term of up to six months with such loans. Importantly, the loan APR is capped at 28%. That’s high, but it’s nothing compared to a traditional payday loan. And with up to six months to repay, the minimum monthly payments will be far easier to meet than a payday loan. You can even have up to three PALs in a six-month period, assuming they don’t overlap and you haven’t rolled any over.

Select finance apps

Some fintech apps will spot you money for a small period of time. For example, platform Dave loans qualifying members between $25 and $500 in as little as five minutes via its ExtraCash account—without a credit check or late fees.

You won’t be charged interest, but you’ll have to pay a monthly $5 membership fee to use the feature. You’ll also be charged overdraft fees if Dave isn’t able to debit your account for the full amount by the due date.

Each platform has varying terms, so make sure you know what you’re getting into before you go this route.

Credit card cash advance

Cash advances are generally considered a last resort when you need funds, as they usually incur a higher interest rate than a card’s standard purchase APR, and interest starts accruing instantly. Still, they can beat opening a payday loan. Expect to pay around 29% APR with many credit cards.

How to avoid payday loans in the future

The best way to avoid payday loans in the future is to focus all your energy on building a an emergency fund in a savings account. It can even be worth neglecting an aggressive debt repayment (while still satisfying your monthly minimum payments) in favor of savings. Paying interest is never optimal, but giving yourself a cash buffer in case of a job loss, sickness, emergency expenses, etc. can help you to keep your accounts current until you can regain your footing.

This will likely include crafting a tighter budget to give yourself more money to channel into your savings. Experts recommend saving three to six months’ worth of essential expenses. In other words, you could keep making all your payments for that window of time.

The takeaway

Consider a payday loan the last and final ripcord when you need money. Their fees are predatory, and their repayment terms are short and unforgiving. If you can’t repay by your next paycheck, many lenders will let you extend your term by a pay period—but with a new round of fees.

When you’re strapped for cash, consider alternatives like Payday Alternative Loans, finance apps like Dave, or credit card cash advances. None of these are great options in general, but they’re a whole lot better than payday loans.

Frequently asked questions

Can credit counseling help me get out of payday loan debt?

Credit counseling can help you to get out of payday loan debt by helping you to devise a clear and actionable repayment path. Credit counselors are professionals and typically work for nonprofit organizations, so they are purely interested in your financial wellbeing.

Can I include payday loans in a debt management plan?

You can often include payday loans into a debt management plan, but there may be exceptions. You can ask your credit counselor to check. Just note that DMPs are made for unsecured debt—so if you’ve opened a loan that requires using collateral (your car, jewelry, etc.), you may not be able to include that in a DMP.

What are the best alternatives to payday loans for emergency cash?

The best alternatives to payday loans for emergency cash include Payday Alternative Loans from credit unions and credit card cash advances. They allow you to borrow a moderate amount of money with a lengthier repayment term than a standard payday loan (and they generally charge far lower fees).

Are payday loans legal in every state?

Payday loans are not legal in every state.

Can I go to jail for not paying a payday loan?

You can’t go to jail just for defaulting on a payday loan. However, you can be sued and have your wages garnished. Lenders will likely take other actions first, such as sending your account to collections and reporting your delinquency to credit bureaus