While advertisements for immediate cash and merchandise are appealing, service members can land in hot water if they are not careful.
Soldiers, especially junior-enlisted members, are targets for high-interest car loans, or payday loans with exorbitant rates, said Maj. Emma Parsons, Department of the Army banking officer.
“There are a lot of predatory lenders out there,” she said.
Soldiers should proceed with caution, she said, noting that the Consumer Financial Protection Bureau says a small-dollar payday loan could equate to an annual percentage rate of nearly 400 percent.
Unaffordable debt coupled with service charges and late fees can quickly spin out of control, putting unsuspecting service members under a mountain of debt, she said.
That is why it is so important for Soldiers to have a plan for their money.
Part of the mandatory services that on-post financial institutions provide are counseling and education partnered with Army-trained personal financial managers, Parsons said.
Trained financial counselors are present on every installation, she said. Soldiers are urged to meet with a counselor and utilize these free services, to help avoid the pitfalls that would put them in financial straits.
Talking to the financial expert can put the situation in perspective and help the service member navigate away from avoidable problems such as spending beyond one’s means and signing on to a quick loan loaded with fees and a high interest rate, she said.
While emergencies do arise, counseling can guide a service member on how to manage money and what are the best options when those situations do occur, she said.
Falling into debt impacts readiness and morale, and directly affects the work performance of the Soldier, Parsons said.
Soldiers who become delinquent on their debts could have their wages garnished, and risk losing a promotion or a high-level security clearance.
For the most junior Soldiers, this might be the first time they are receiving a paycheck, said Maj. Helen Thomas, the banking liaison officer at Fort Bragg, North Carolina.
It’s important they spend wisely and not fall into the trap for quick money or gleaming new merchandise they don’t need and can’t afford.
“I see it all the time. Young Soldiers come to us for counseling after they’re in a financial bind; we want to help them before the problem happens,” she said.
“Let’s catch them before they make those decisions,” she said.