In the UK payday loan interest rates are listed in terms of APR (anualised interest) because regulations stipulate it. A payday loan is a short term loan so the effective interest rate is lower. Still high - that's how the time value of money works, try getting a short term bridging loan from a retail bank (actually almost impossible, hence Wonga et al) - but not 1000%. Always provided that you pay it back on time, of course. It's true that taking one out without the ability or intent to pay it back within the window is irrational but people in dire straits are often subject to hyperbolic discounting effects.