MoneyTrack, a public television series about investing, has partnered with MSN Money to presented an interesting group of videos about financial issues and the military. The first segment talks about Predatory Lending, specifically payday loans. It is hosted by Pam Krueger and Jack Gallagher of MoneyTrack and features real stories about service members and their experiences with payday loans.
These same financial experts are also featured in an on-demand Scams and Predatory Lending webcast offered through the California Department of Corporation’s Troops Against Predatory Scams program. About 30 minutes in length, this webcast includes video, text, links to resources and the opportunity to submit questions to the experts. Also at the TAPS website are downloadable publications on a variety of personal finance topics of interest to military members and their families.
Payday loans and other predatory scams can look attractive when you’re in a cash crunch. There are several problems with payday loans. According to the Center for Responsible Lending, "the payday lending business model is designed to keep borrowers in debt." Payday loans look easy because they don’t require good credit and it is easy to "roll over" your debt into a new loan when you can’t pay the first one. The interest and fees can quickly dwarf the amount of the original loan, and combined with the short repayment schedule, it can be difficult to pay the balance in full.
However, there are almost always better options available. Check with your service’s relief organization (Army Emergency Relief, Navy-Marine Corps Relief Society, or the Air Force Aid Society) about the possibility of no interest loans, or ask at your base’s credit union to see what options they offer. Programs and offerings vary by location, but many major military credit unions offer alternatives to payday loans. For example, the Pentagon Federal Credit union offers Asset Recovery Kit loans at select branches in the U.S.
When money is tight, a payday loan may look like a quick and easy solution to your financial trouble. I hope that the videos, webcast and articles linked here will help you find a way to avoid these troublesome and dangerous products.