A cap on the cost of payday loans has come into force aimed at preventing debts spiralling out of control.
Fees and interest paid by customers using payday lenders will now be limited, lowering the cost of borrowing for most people.
The new rules also mean those who cannot afford to repay their debt on time will never pay back more in charges than the sum they initially wanted to borrow.
For all high-cost short-term credit loans, interest and fees must not exceed 0.8% per day of the amount borrowed.
Default fees for borrowers who fail to repay on time will be capped at £15.
The measures mean that if someone borrows £100 for 30 days and pays back on time, they will not be charged more than £24.
And if someone who borrows £100 but struggles to repay their debt will never pay back more than £200, including fees and charges.
The Financial Conduct Authority (FCA), which oversees the industry, said the move will lower costs for most borrowers and ensure that charges are proportionate to the size and duration of the loan.
Short-term lenders said the caps would lead to fewer people getting loans from a smaller group of lenders.
They said that initially at least, the cost of a payday loan would generally be at or near the cap.
Wonga, Britain's biggest payday lender with more than one million active customers, started capping the cost of its loans in mid-December in order to comply with the rules.
Stricter rules for credit brokers are also being introduced amid concerns consumers have often mistaken credit brokers for lenders.
Martin Wheatley, chief executive of the FCA, said the payday loan cap will "make the cost of a loan cheaper for most consumers".
"Anyone who gets into difficulty and is unable to pay back on time, will not see the interest and fees on their loan spiral out of control - no consumer will ever owe more than double the original loan amount," he said.
The payday loans industry, which has been the focus of criticism in recent years, has undergone a string of shake-ups after coming under the regulation of the FCA last April.
Payday lenders are banned from rolling over a loan more than twice and and they can only now make two unsuccessful attempts to claw money back out of a borrowers' account.
The firms have only ''interim permission'' to operate under the FCA's stricter regime and they will need to pass assessments in order to get full permission to carry on.
Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents short-term lenders including the Money Shop, Quick Quid, Peachy and Sunny, said: "We expect to see fewer people getting loans from fewer lenders and the loans on offer will evolve but will fully comply with the cap."
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