With so many Americans feeling the pressures of the recession, many are finding themselves living paycheck to paycheck. Many are even finding that their paycheck isn’t enough to cover their monthly expenses. Some of those who need a little extra money to hold them over until they get their next check are turning to payday lending.

Payday lending is far from new, but it is getting new life in this struggling economy. With these loans, borrowers receive a small-denomination loan in exchange for a post-dated check from their account. The term of the loan is only until they receive their next paycheck (usually about two weeks). When the loan comes due, the borrower can either pay up or the lender will deposit the check (physically or electronically) and withdraw the funds from the borrower’s checking account.

Payday loans charge massive fees, which translate into exorbitant interest rates. For example, a borrower might be charged 20% of the loan amount in fees for a 14-day period. That amounts to 521% annual percentage rate.

The real problems with this type of loan begin if the borrower is unable to repay the debt in the initial term. If the loan amount is not paid in full, the borrower will have to take out another loan to cover the fees -- this is called rolling over the loan. Most payday lenders do not allow you to make partial payments. The principal on the loan will remain as well as any unpaid fees, and the next month’s fees are added to the debt. This debt cycle can continue indefinitely. If it takes six months for the borrower to pay off a $400 debt at $80 in fees each month, for example, the borrower would pay $480 worth of fees. That’s more than the $400 loan itself.

According to the Center for Responsible Lending, “the average payday borrower is flipped eight times by a single lender.” The name of the game for payday lenders is getting borrowers in the door. From there, the goal is to keep customers in their loans for as long as possible to make the most money from a single loan. This type of loan is targeted towards low-income borrowers who are the least capable to repay the loan in the first term.

If you find yourself needing a bridge loan to cover you until you get your next paycheck, you are far better off borrowing money from family or friends. You will pay much less interest and avoid getting trapped in a downward spiral with a predatory lender. You should also consider approaching your employer about giving you a true cash advance on your paycheck. In this economy, most understand that even responsible people can encounter periods of financial hardship.

If you don’t have anyone you can borrow from, look for alternative loans from a credit union or emergency assistance program in your community. Finally, if you are looking for a loan to pay a bill, talk to the lender about suspending your payment or temporarily waiving a late fee. In the worst-case scenario, it may make more sense to accept a late fee rather than fall into the payday loan debt trap.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.