Last updated on February 18th, 2026 at 03:02 pm
The volume of payday loans taken out each year has increased significantly in recent years, worsened by the financial impact of the coronavirus pandemic and ongoing cost-of-living pressures. Recent statistics show that approximately 12 million Americans use payday loans annually, though the industry is shifting rapidly from storefronts to online lending.
How Many People Use Payday Loans?
Payday loans remain prevalent across the United States. In 2017, there were 14,348 payday loan storefronts across the US. By 2021, that number peaked at over 23,000 — exceeding the number of McDonald’s locations. However, due to stricter state regulations and the shift to online lending, the number of physical storefronts has declined to fewer than 14,000 as of 2024. Meanwhile, the CFPB estimates that around 12 million Americans continue to use payday loans each year, with a growing share applying for payday loans online.
Key Points
- Approximately 12 million Americans use payday loans annually
- Physical payday loan storefronts have declined from 23,000+ to fewer than 14,000 since 2021
- The demographic of payday loan users tends to be younger generations, with Millennials and Gen-Xers making up the majority
- The US payday lending and check cashing industry is worth approximately $20 billion as of 2025
Who Takes Out Payday Loans?
According to Pew Charitable Trusts research, the predominant users of payday loans are Millennials and Gen-Xers, with 52% of all borrowers aged between 25 and 44. Around 9% of adults aged 25-29 have used a payday loan, compared to just 2% of people over 70. The surge in online payday loans and cash advance apps has made payday loans even more accessible to younger borrowers.
Key demographic factors linked to payday loan use include those with a low annual income (below $40,000), those who are not college educated, African Americans, home renters, military service members, and those who are separated or divorced.
How Much is The Payday Loans Industry Worth?
Payday loans are a multi-billion dollar industry. The US check cashing and payday loan services industry is worth approximately $20 billion as of 2025, according to IBISWorld. An estimated $9 billion is paid annually in payday loan fees alone, with repeat borrowers generating around 75% of all industry revenue.
Globally, the payday loans market was valued at approximately $35 billion in 2023 and is projected to reach over $52 billion by 2033, growing at a compound annual rate of about 4.1%.
What Are People Using Payday Loans For?
Despite the purpose of payday loans being for short-term use to cover emergency expenses, 7 in 10 payday loan borrowers are using them for regular recurring payments including rent and utility bills.
How Much Are People Borrowing?
The average amount of a payday loan is $375, with the average borrower taking out 8 loans per year. Fees typically range from $10 to $30 for every $100 borrowed, with $15 per $100 being the most common charge. Based on the typical two-week payday loan, this equates to an average annual percentage rate (APR) of approximately 391%.
As a result, payday loan borrowers end up paying back far more than they initially borrowed. Borrowers spend around $520 in interest for every $375 they borrow. Americans spend approximately $4 billion annually on payday loan fees.
Around 12 million US adults take out payday loans each year.
How Many People Are Repaying Their Payday Loans?
According to the Consumer Financial Protection Bureau (CFPB), only about 14-20% of borrowers are able to pay back their payday loans on the initial due date. Four out of five payday loans are rolled over or renewed within 14 days. A staggering 80% of payday loans are taken out within just 2 weeks of paying off a previous payday loan.
Of the huge amount of payday loans that are taken out annually, nearly 1 in 4 payday loans are rolled over or re-borrowed 9 times or more.
As of March 2025, a new CFPB payday lending rule limits lenders to two attempts at withdrawing payment from a borrower’s bank account after two failed attempts, providing additional protection for borrowers.
Which US states Have The Most Payday Lenders?
The volume of payday lenders varies from state to state, particularly as some states do not legally permit payday loans. California has the greatest volume of payday lenders, followed by Texas, Tennessee, and Mississippi. New Mexico has the most payday loan stores per capita.
The states which are more densely populated with payday loan stores per capita tend to be those with higher poverty rates and larger minority populations, including New Mexico, Alabama, Mississippi, and South Dakota.
As of 2025, 18 states and the District of Columbia have either banned payday loans outright or effectively eliminated traditional payday lending through strict rate caps (typically 36% APR). States with outright prohibitions include Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia. Additional states including Colorado, Illinois, Montana, Nebraska, New Hampshire, New Mexico, South Dakota, and Virginia have enacted rate caps that make traditional high-cost payday lending unviable.
Among the states that still permit payday loans, some have staggeringly high interest rates — Idaho leads with an average APR of 652%, followed by Utah (554%) and Texas (527%).
