A generation ago the payday loan industry didn't even exist. Its predecessor, check cashing outlets dominated the market, but it took the rise of the internet to bring the payday loan industry to the forefront. What is the impact of payday loans on consumers and should you ever get one? Well, that answer is not cut and dry as many factors play into the payday loan industry.

On the surface, borrowing just enough money until payday seems relatively harmless. The day is Monday, your bills are due on Wednesday, but you don't get paid until Friday. Getting a seven day loan more than covers the time for you to get paid from your job and to pay your bills. Yet, even in that seven day period a lot can happen including:

--You'll be charged a fee ranging from ten to thirty dollars for every one hundred dollars borrowed. If you borrow $600, you could be charged $60 or more for the loan. This means that when the low comes due in one week you had better be able to pay the lender $660 to retire the loan. If you don't, then you will be forced into taking an extension or risking default. In short order your debt could overrun your credit rating.

--You may not understand the fees involved. Much of the payday loan industry does little to educate consumers on what is best for them. While $60 doesn't sound like a lot of money it does translate into triple digit interest rates on the loan. Much of that information never comes out in the course of the loan application.

--You may not understand that it is a loan. Because a term such as ?cash advance? is often used, you may not know that you have entered into a credit transaction. This means that you agreed to a loan, monies must be repaid according to the terms or you risk default and additional steep penalties. If you fail to make good on the loan you are risking ruining your credit score. Even if your credit score is already in tatters, further erosion can keep you from recovering any time soon.

It has been reported that more than ten thousand of these lenders are operating across the USA. $50 billion in transactions occur every year, more than the net worth of many leading banks. So, you are dealing with a small time industry, but a racket that can truly break you if you are not careful.