The level of the payday loans cap has not yet been decided.
It will be included in the Banking Reform Bill, which is currently going through parliament.
Annual Payday loan rates of 5,000% aren't unusual, and lenders say the loans are meant to be short term and prefer to use small percentages "per day" as a measure. However, you can easily owe double what you borrowed after just a couple of months.
This BBC chart shows what happens when you take a new loan to pay the interest.
Now the government has been forced to act.
A recent Office for Fair Trading (OFT) report said there were serious problems with the way the industry worked. Ed Miliband has already pledged to cap the cost of loans, along with promising to give councils new powers to limit the spread of payday lending shops.