It’s no secret that payday loans are an expensive fix for borrowers. While they can offer quick access to cash, payday loans typically come with fees of 400% or more. According to a 2025 report from the Center for Responsible Lending, payday lenders collected $2.4 billion in fees from borrowers in a single year.
On top of the steep cost, short repayment periods can make payday loans risky. Whether you’ve taken out a payday loan already or you’re thinking about using one when you’re low on cash, you may have some options for reducing your payments or alternatives to consider.
Here’s more information about how to get out of the payday loan cycle and start reducing your debt balances.
Borrowing from payday lenders is expensive; when you take on a payday loan, you’ll owe fees and interest on top of the amount you borrow.
For each payday loan you borrow, you’ll take on interest charges as well as fees. The fee is usually a portion per $100 you borrow — around $10 to $30 for every $100 you borrow, according to the Consumer Financial Protection Bureau (CFPB). But the cost really begins to add up if you can’t pay your short-term loan back when it’s due and need to pay the fee again to roll over the loan for another period.
That’s a common occurrence for many borrowers. A CFPB report shows that 4 out of every 5 payday loans are rolled over or renewed. And those rollovers can lead to a lasting debt cycle: More than 80% of the borrowers who renew their payday loans end up owing as much or more than they originally borrowed.
Once you’ve built up a larger debt balance with payday loan rollovers, you may need to explore other options to start making any progress paying down that debt.
Read more: Payday loan vs. personal loan
If you’re thinking of taking on a payday loan or you have payday loan debt you need to pay off, these alternative options could offer a solution:
A debt consolidation loan is a personal loan option you can use to pay down existing high-interest debt. You’ll receive your loan amount as a lump sum, which you can use to repay your payday loan balance. Then you’ll pay the personal loan back over time at a fixed interest rate with regular monthly payments.
If you choose debt consolidation, it’s important to have a plan to pay down your new personal loan throughout the repayment period. Make sure you can afford the monthly payments so you can pay down your balance as agreed. You should also be prepared to pay an origination fee when you take on the loan, which may be as much as 10% of the loan amount.
The major downside of debt consolidation loans is that you typically need good credit to qualify — especially if you want the lowest interest rates. If your borrowing has left you with a poor credit score, you may want to consider another option that can help you reduce your payday loan more quickly.
Learn more: Best personal loans for bad credit
Payday alternative loans (PALs) are a borrowing option offered by federal credit unions. There are two different types of PALs:
PALs I: Up to a $1,000 loan with a term between one month and six months. You must be a member of the credit union for at least one month before you can borrow a PAL.
PALs II: Up to a $2,000 loan with a term between one and 12 months. Credit unions can make these loans available immediately after you become a member.
One of the biggest benefits of these loans is the 28% interest rate cap. This applies to federal credit unions, but other credit unions offering similar payday alternatives may have different interest rate criteria.
Do your research to find out if your credit union (or a credit union you’re eligible to join) offers PALs, since they may not be available from all credit unions. Make sure you read the terms of your specific credit union’s payday alternative loans, including the interest rates offered, to find out if they work for you.
Read more: What is a second-chance loan? Consider these payday loan alternatives.
Instead of rolling over your payday loan for another term, contact your lender about using an extended payment plan, which may allow you to pay off your payday loan with smaller payments over a longer period of time.
The specifics of an extended plan depend on the payday lender you choose as well as your state’s laws. In 16 states (of the 27 where payday loans are allowed), lenders offer extended payment plans. Some state laws dictate how many installments a lender is required to allow for extended plans, the minimum term length for repayment, whether fees are allowed, and more.
There may also be eligibility requirements. For example, you can use an extended payment plan after you’ve rolled over your payday loan a certain number of times or after you’ve repaid a portion of the loan.
According to the CFPB, these plans can save you a substantial amount of money, but they’re underutilized in the states where they’re available. A CFPB report from 2022 found that the number of borrowers who roll over or default on their payday loans is greater than those who opt in to extended payment plans. Many of these plans charge no fees, so you could end up paying much less over time than you would by rolling over your payday loans and incurring additional fees every few weeks.
Talk to your lender and check your original loan agreement to find out whether you may qualify for an extended payment plan.
Related: 3 ways to get your paycheck early
If you’ve taken on more debt than you can manage from payday loans, credit cards, and other types of borrowing, a credit counselor may be able to help you find a solution. Look for a reputable, nonprofit credit counselor certified through an organization like the National Foundation for Credit Counseling (NFCC).
A credit counselor can help you adjust your budget and create a repayment plan. Credit counselors may also offer debt management plans. With a debt management plan, your counselor will work directly with your creditors and you make payments to the credit counselor to pay down your debt over a few years.
Payday lenders may not work with credit counselors, but this can be a good option if you also have other types of debt and want help paying down your balances.
Read more: Burned by a bad loan? Here’s how to recover.
If you cannot pay down the balance on payday loans you owe (or you also have mounting debt balances from different loans or credit cards), you may be thinking about bankruptcy. Before you decide to file for bankruptcy, consider whether debt settlement could offer relief instead.
Working with a debt settlement company has its own risks. You could hurt your credit score if the company asks you to stop making payments toward your debt and your lender sends the debt to collections. There’s also no guarantee that a lender will be willing to settle your debts. But if you can reach a settlement, you may be able to reduce the overall amount of debt you owe.
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