The number is probably officially around 7%, but it’s a moving target.
One of the reasons the number is hard to really quantify is because payday lenders churn their loans (allow you to take out a new loan to pay off the old one).
Having read the articles below, all I can tell for certain is that there are very high interest rates being paid out by people stuck in the death spin of payday loans, and those borrowers are paying through the nose for them. I can also tell you that you can get a discharge of your payday loan debt in bankruptcy.
Here are some numbers from various sources:
1. 37%… 2012, Consumer Federation of America (comments); http://www.consumerfed.org/news/512 claims that
A significant share of borrowers became late or defaulted on their payday loan, triggering more fees and placing their bank account at risk. 37 percent of borrowers experienced default in the first year of borrowing. Within the first two years, 44 percent did.
The payday lending industry claims that 95 percent of loans are paid on time, but this does not mean that a debt trap does not exist.
2. 3% – 46% (depending on the metric you use)… 2009 NYU School of Business Research Paper by Aaron Gold. http://www.stern.nyu.edu/cons/groups/content/documents/webasset/con_043130.pdf
3. 7.4% … 2013 Guardian (United Kingdom) article by Nils Pratley. http://www.theguardian.com/business/nils-pratley-on-finance/2013/sep/04/wonga-business-model-slick-moral-qualms
4. 3%… 2013 Pew Charitable Trusts Report. http://www.pewstates.org/uploadedFiles/PCS_Assets/2013/Pew_Choosing_Borrowing_Payday_Feb2013.pdf
5. 6%… 2011 Forbes article. http://www.forbes.com/sites/timworstall/2011/12/20/why-payday-loans-are-so-expensive/
6. 10%… 2012 Reuters article. http://blogs.reuters.com/felix-salmon/2012/01/08/why-low-interest-payday-loans-could-scale/