Payday lending activity increased in California last year, but the size of loans and fees charged both declined, according to a new report from California's banking regulator.

The total amount of payday loans rose 6.66% to $3.38 billion in 2014, compared to 2013, the California Department of Business Oversight said. The total number of transactions handled by payday lenders rose 2% to 12.4 million. The number of payday loan customers increased to 1.8 million.

The average size of payday-loan transactions fell 9.6% to $235. The average annual percentage rate on transaction fees fell to 361% from 408%.

California defines payday loans as any transaction in which the consumer gives the lender a personal check for the amount of money desired, and the lender provides the money minus fees. State law limits fees to 15% of the check amount, and each loan to $300 minus fees. The lender deposits the check for no longer than 30 days.

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