Military Personnel and Predatory Lending
The Department of Defense found that soldiers, sailors, and aviators are as many as four times more likely to be victims of payday lenders as the general public.
Military personnel are a prime target for predatory lenders because they typically are young, have limited experience in managing finances, and don’t have a financial cushion to assist in emergencies. Service members are paid regularly, are unlikely to be downsized, and seldom quit employment, which also makes them prime targets.
Predatory lenders situate themselves in close proximity to military bases and use attractive marketing techniques to entice military personnel. Loans are configured based on availability of assets and guaranteed continued income. Predatory lenders’ business models take advantage of the inability to pay and charges high fees and interest rates on loans. Education and counseling assistance are available to protect military members from falling victim to predatory lending schemes.
- Talk to your unit leader.
- It’s understandable not to want those in your unit to know of your financial struggles. Some banks and credit unions on military bases understand the need for quick cash in emergencies, and alternative resources may be available.
- Don’t be an easy target.
- Predatory lenders present an attractive option. Take advantage of the financial education and assistance programs available in your branch. Once you get caught up in high interest rates, credit debt, and fees, it’s hard to get back on track. Plan early.
To keep your money safe, look for Federal Deposit Insurance Corporation (FDIC) insured banks and National Credit Union Administration (NCUA) insured credit unions. Banks and credit unions will have the logo on the front page of their website and posted on windows and in the lobby. If a bank or credit union goes out of business, the FDIC and NCUA will give back your money, up to $250,000. FDIC and NCUA do not insure money invested in stocks, bonds, mutual funds, or life insurance policies, even if those products are purchased through an insured institution.
Create a plan for your finances. The Financial Industry Regulatory Investor Education Foundation’s website www.SaveAndInvest.org has programs, resources, and tools designed for military personnel to manage money and invest wisely. The program will help you track spending, start an emergency fund, and calculate your net worth.
