A different kind of military debt
Think “military debt”, and chances are you picture the government owing billions on tanks and airplanes. But there’s another kind of military spending: getting into debt on a personal level.
NPR’s Morning Edition highlighted this issue today, in a story that explained how the U.S. government is working with military members on personal finance. As Scott Horsley reports, “Carrying too much debt can be a problem for anyone, but when the debtor wears a military uniform, it can be a threat to national security.”
Think about it — if you’re deeply in debt and don’t see a way out, maybe the offer from a foreign country to look the other way for just a minute becomes slightly more tempting. Although it’s not something most people want to admit, money can be a temptation. (Of course, it could be a temptation to someone that is NOT up to their ears in debt as well.) But at the very least, being deeply in debt can be stressful and overwhelming, making it difficult to focus, so it’s easy to understand why this would be a concern for the military.
The John Warner National Defense Authorization Act for Fiscal Year 2007 attempts to address this issue as well. Among other things, one of the effects of the act will be to limit the interest rate charged on payday loans to members of the military to 36 percent. It will also prohibit predatory practices by creditors who lend money to members of the military. Which is all well and good, but two things concern me about that.
First, 36 percent? I realize that that is significantly less than the nine hundred and eleven percent rate on a one-week loan cited by consumersunion.org, but 36 percent is still a huge amount of interest. And, if payday loans and car title loans are a big enough issue to legislate in regard to the military, maybe they are a big enough issue to legislate for everyone. The same thing applies to the predatory practices.
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November 10th, 2006 at 11:45 am
Yup! Military personnel are being passed over for international assignments if their personal debt levels are too high, because they’re considered more succeptible to bribery or treason.
They say that limiting predatory lenders to 36% APR is going to put them out of business for the most part. If that’s the case, why not just outlaw them on a state level? Virginia only began allowing payday lenders in 2002, and they could just as easily outlaw them again.
November 12th, 2006 at 10:00 am
Outside each military installation where I have visited or lived, you can find so many places that will extend credit to servicemembers - not only payday lenders. Car dealerships, appliance stores, almost anything - if you’re military, you can get credit. It’s become a huge problem and while I’m glad that the higher-ups are starting to take notice, it’s going to take more than stopping payday loan places & throwing a bit of credit counseling their way. I know quite a few service members who’ve gotten in trouble with gambling/gaming. They probably saw it as a chance to get out of debt(if they could just win - maybe the next game… etc) but just wind up with more debt. The county DA’s office where we were stationed used to come to the base each week with bad checks written by service members & contact their commander to make pay arrangements. I was in the liason’s office once getting a map & the DA representative told me that his list was HUGE & talked to me about the merits of balancing the checkbook regularly.
January 2nd, 2009 at 6:46 pm
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