Predatory loans rarely look expensive in the moment. "$15 per $100." "No interest — just four easy payments." "A small fee." The price is real; it's just hidden in the framing. Here's how to see it.
A fee is an interest rate in disguise
Borrow $400, pay a $60 fee, due in 2 weeks. Sixty dollars on four hundred is 15% — but only for two weeks. There are about 26 two-week periods in a year, so as a yearly rate (APR) that's roughly 15% × 26 ≈
≈ 391% APR
The same $400 from a credit union might cost around 28% APR. The fee "sounds small" precisely because it's quoted for two weeks, not a year. Always convert a fee to an APR before you judge it.
The trap isn't the first fee — it's the rollover
If payday comes and you can't spare the $400, many lenders let you pay just the $60 fee to push it another two weeks. The balance doesn't move. Click through what that costs:
You borrowed $400. In two weeks, $460 is due ($400 + a $60 fee).
After a few months of "just the fee," you've paid more than you borrowed — and you still owe the whole $400. That's the spiral, and for this kind of lender it's the business model, not an accident. The way out is to not roll over: if you can't pay on time, that's the signal to stop and get help.
"No interest" can still bite — buy-now-pay-later
Splitting a purchase into four payments can genuinely be 0%. The trap is twofold: late fees (often a flat charge that, on a small balance, works out to a huge effective rate) and overextending — it's easy to run several plans at once and lose track of how much you've committed. Treat every plan as a debt, and add them all up.
Overdraft: the $35 coffee
An overdraft fee (around $35) on a $4 purchase is, in effect, a tiny loan at an astronomical rate. You can usually opt out of overdraft "coverage" on debit-card purchases, so the card is simply declined instead of triggering a fee — almost always the cheaper outcome.
The one move
Turn every "fee," "easy payment," and "small charge" into two plain numbers: the APR, and the total you will actually repay. Then compare. A cost that hides from those two questions is hiding for a reason — and you can almost always find a cheaper way once you've seen it. Not sure if an offer is a trap? Run the debt-trap check.