You might think those serving in the military have enough to worry about fearing for their lives in Iraq and elsewhere. But apparently, they must fear for their bank accounts, too.
The Department of Defense (DOD) is reporting another problem that hits services members, and their families, right where it hurts: the pocket book. According to a report released in early August, quick cash loans, or, predatory loan schemes, are a prevalent problem for those in the armed services-and young enlistees with a steady paycheck are the prime targets.
First year enlisted members can make about $15,000 a year without taxes, and 48% of those enlisted are less than 25 years old. Allowances and free services like health care and shelter, can also be added to the equation.
In the report, the DOD gave an example of just one instance where an enlisted service member went into debt by taking out a “pay day” short-term loan:
The DOD also noted that “pay day” businesses are “ubiquitous” around military installations.
In Colorado, it was reported last January in the Rocky Mountain News, that “pay day” lenders had an average annual interest rate of 391%, which can spell big trouble for those who wait to pay back their loans.
In response, the DOD is claiming to have educated more than 400,000 military personnel and dependents in the art of managing finances–that is, finding alternatives to potentially hazardous lending. The DOD is also calling for lenders to disclose all fees and charges to military clients, and to do away with provisions that would inhibit legal recourse for service members.