LANGLEY AIR FORCE BASE, Va. –
Military members will find less interest in payday loans and payday lenders will find less money in the military beginning Oct. 1.
The change is an amendment to the 2007 Defense Authorization Bill, passed Sept. 30, 2006, which allows Congress to limit the amount of interest payday lenders can charge service members, capping high-interest loans at an annual rate of 36 percent.
Previously, payday lenders could charge - and did - upward of 390 to 780 percent interest and often opened their doors right outside military installations.
"Military bases are like big fishponds to payday lenders - full of young, financially inexperienced families trying to get by on modest pay," according to the Center For Responsible Lending.
Although the cap on payday loans may provide more flexibility to future borrowers, high-interest lenders are still a potential danger to service members - those who are in contracts and those who may choose payday loans over lower-interest options.
Those currently in high-interest loan contracts may be asked to pay off loans earlier than scheduled - by Oct. 1 -or lenders may take action on existing payday or vehicle title loans.
Airmen who find themselves in debt due to high-interest loans can always contact the Langley Airman & Family Readiness Center, where community readiness consultants can discuss payment options, based on each individual situation.
In addition, if Airmen know there are alternatives to pay day loans, they are less likely to be taken advantage of when unexpected financial difficulties arise" said Anna Bennett, Langley Airman & Family Readiness Center community readiness consultant.
Many times, Airmen may be hesitant to seek financial help because they don't want "to get in trouble;" they don't want their commanders to find out, said Ms. Bennett. However, Airmen who let their debt spiral out of control may get more than just trouble; they may get a letter of counseling, and Article 15 or in some cases, discharged from the Air Force.
Ms. Bennett said the way to combat financial irresponsibility which can lead to high-interest loans is "prevention through education."
Currently, an A&FRC readiness consultant is assigned to each unit, where they meet with commanders and offer assistance to the unit - to include financial assistance, Ms. Bennett said.
"The most important thing is to increase financial literacy," she said. "If we can educate our servicemembers on the importance of budgeting, paying yourself first and emergency savings, we can prevent many situations that lead to payday loans.