Military warning personnel on payday loans
Military warning personnel on payday loans
Military warning personnel on payday loans
SAM HANANEL
Associated Press
WASHINGTON - Army Chief Warrant Officer Thomas Burden needed money, but he had just been through a divorce, his credit was bad and he couldn't qualify for a conventional loan.
So he turned to a payday lender - one of dozens within a mile of Fort Hood, Texas - and began a cycle of getting quick cash advances at high interest rates. His first $300 loan cost him $60 every two weeks. More loans and fees at the equivalent of 520 percent interest per year soon swelled the debt to more than $1,400.
"It just kind of keeps snowballing if you don't have the money to cover it," said Burden, 35.
The Defense Department is starting a program to warn service members about the dangers of payday loans, citing reports that suggest payday lenders target military personnel.
John Molino, deputy undersecretary of defense for military community and family policy, said last week that the department would begin teaching service members how payday loans can lead to an endless cycle of compounding debt and encourage them to make better choices.
The action follows a study, released last month by two professors at the University of Florida and California State University, that found "irrefutable geographic evidence demonstrating payday lenders are actively and aggressively targeting U.S. military personnel."
The study looked at 19 states and in 12 - Arizona, California, Colorado, Delaware, Florida, Kentucky, North Carolina, South Carolina, South Dakota, Texas, Virginia and Washington - found that the single greatest concentration of payday loan stores in a county with a military base.
Military warning personnel on payday loans
SAM HANANEL
Associated Press
WASHINGTON - Army Chief Warrant Officer Thomas Burden needed money, but he had just been through a divorce, his credit was bad and he couldn't qualify for a conventional loan.
So he turned to a payday lender - one of dozens within a mile of Fort Hood, Texas - and began a cycle of getting quick cash advances at high interest rates. His first $300 loan cost him $60 every two weeks. More loans and fees at the equivalent of 520 percent interest per year soon swelled the debt to more than $1,400.
"It just kind of keeps snowballing if you don't have the money to cover it," said Burden, 35.
The Defense Department is starting a program to warn service members about the dangers of payday loans, citing reports that suggest payday lenders target military personnel.
John Molino, deputy undersecretary of defense for military community and family policy, said last week that the department would begin teaching service members how payday loans can lead to an endless cycle of compounding debt and encourage them to make better choices.
The action follows a study, released last month by two professors at the University of Florida and California State University, that found "irrefutable geographic evidence demonstrating payday lenders are actively and aggressively targeting U.S. military personnel."
The study looked at 19 states and in 12 - Arizona, California, Colorado, Delaware, Florida, Kentucky, North Carolina, South Carolina, South Dakota, Texas, Virginia and Washington - found that the single greatest concentration of payday loan stores in a county with a military base.
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