Working on Troops' Financial Fitness


WASHINGTON -- A young servicemember saddled with debt and in need of some quick cash doesn’t have to go far. Lenders offering same-day loans sit outside the gate of nearly every military installation in the nation.

But the lure of fast and easy cash can lead strapped troops down a path of steep interest rates and fees that far surpass their initial loan.

In other words, if it sounds too good to be true, it probably is, said Brenda Linnington, director of the Better Business Bureau Military Line.

Protecting servicemembers and their families from financial pitfalls such as payday lenders is Linnington’s primary goal at Military Line. The program’s mission, she explained, is to increase military members’ financial literacy through information, education and outreach -- both online and on the ground.

“I’d like Military Line to serve as a bridge between the civilian and military communities,” said Linnington, an Army veteran and the wife of an active-duty Army officer. She took on the job in January after the former director, Holly Petraeus, left to head the Consumer Financial Protection Bureau’s Office of Servicemember Affairs.

The program, created in 2004, also is a partner in the Defense Department’s Financial Readiness Campaign, which gives local bureau representatives access to teach financial literacy classes on military installations. The bureau has 164 local offices scattered across the country.

The importance of a military family’s financial stability can’t be overestimated, Linnington said.

“If we’re deploying a young Soldier and expecting him to do great things on our behalf, but he’s greatly in debt and collectors are calling his family,” she said, “that Soldier is never going to be completely mission-ready.”

One major concern, Linnington noted, is that financial issues often lead to the loss of security clearances, which can affect servicemembers’ ability to perform their jobs.

“To be under that level of emotional strain and then expect them to be a strong family that’s growing and thriving is unrealistic,” she said.

Debt and debt management are among the most pressing financial issues for servicemembers and their families, she noted, particularly for the younger population. Reports indicate that junior servicemembers carry a heavier load of debt than their civilian counterparts.

This debt combined with a steady paycheck and a strong sense of discipline can add up to an attractive target for scam artists, Linnington said. “It’s very enticing to someone looking to entrap you in a contract,” she added. “A young private might not make a large income, but collectively, if there’s a bunch of privates, that’s a lot of money.”

Linnington said the scams have come fast and furious in recent years. Some scammers contact military family members by phone or email and make false claims that the servicemember has been wounded overseas and money is needed to help. Or a person posts a house for rent, but when the servicemember arrives, the person has vanished, along with the security deposit.

And while payday lenders are, by law, capped at 36 percent, they find loopholes by charging fees as opposed to boosting interest rates.

“There are some really terrible things going on,” she said.

To avoid getting trapped in a scam, Linnington stressed the importance of financial education and well-being. “It’s getting people to realize they need to be careful and not necessarily go on someone’s word,” she said.

Tackling debt also can help, she said, since feeling overwhelmed financially can leave people more vulnerable to unscrupulous businesses and predatory lenders.

People who are in over their heads should talk their local personal financial manager, she advised, who can provide guidance and referrals to helping organizations, such as military aid societies.

The Military Line website also offers service-specific resources, such as consumer alerts and guides, reports on businesses, and an avenue to file complaints. The bureau will help to resolve issues and also alert the military population of a potential scam, she said.

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