Recent reports have confirmed that military personnel provide attractive targets for payday lenders because of their lack of experience and youth. Their responsibilities with their families coupled with their low income leave them groping for more cash; their government paychecks provide enough room for repayment of payday lenders.
As such, payday lenders and cash advance shops are strategically placed near military bases; their trade names imply connection with the military (such as Armed Forces Loans and Military Financial, Inc.); former military personnel are employed in these shops and they solicit soldiers as their line of business.
These marketing activities influence innocent military personnel into the trap of payday loans.
The Impact of Payday Lending on the Military
When caught in the debt trap, military members are humiliated to acknowledge their financial difficulties because they are afraid of being punished by their commanding officers. Grave penalties are in store for these personnel. Failure to repay a payday loan is punishable by:
- Court martial
- Loss of security clearance
- Transfer to a different unit
Aside from the harm to individuals, military families are strongly affected by such abuses. In times of deployments, military families become helpless. Preparing for expenses for their families and for members of the service provide sufficient grounds for military personnel or their wives to seek the help of payday lenders as a financial channel.
Payday lending results to a ripple effect on the military itself. For instance, almost 10% of the 10,000 active-duty military Army Emergency Relief office at Fort Bliss in Texas sought financial counseling because of payday loans and other debt problems.
Financial anxieties and its influence on the readiness of the military is now a major matter to senior military officials.
The Military Response
In reaction to the military loan situation, the military has taken a number of steps to assist its members needing emergency cash. As an example, lenders are not allowed to shoot ads on post at Fort Carson, Army post in Colorado Springs, Colorado, that would give the wrong impression that the Army tolerates and concurs with payday lending companies.
Outside organizations, such as the Army, Navy-Marine Corps, and Relief Societies of the Air Force have also provided assistance. They offer financial advice and emergency financial aid to military members. Military credit unions have also moved forward to assist military members in need of short-term emergency funds