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Payday loans are short-term, small-dollar loans typically capped at $500. They're considered high-interest because of their fee structure.

A typical two-week $100 payday loan comes with $15 in fees — which equates to an annual percentage rate of 391% — according to the Consumer Financial Protection Bureau. For context, financial experts consider 36% the maximum APR a loan can have to be affordable.

Because payday loans are relatively easy to get, they can also feel like a surefire solution to an urgent financial problem, says Anne Leland Clark, executive director of Exodus Lending, a nonprofit based in St. Paul, Minnesota, that helps families break out of predatory loan debt. But when people can't repay, their financial situation becomes more precarious.

"Payday loans may provide immediate relief in a financial crisis or a financial trauma, but then it almost retraumatizes you," Clark says. "It causes more stress, and people fall into a cycle where they aren't able to catch up."