trouble with payday loans

Fighting for troops' finances

Payday loans, some believe, began way back among the Roman soldiers in the time of Caesar.

And military personnel today still remain a target for predatory loans and financial fraud, Holly Petraeus told a group of about 50 uniformed personnel at Fort Harrison Wednesday. Plus, some in the military, especially young people, manage their financial affairs poorly and dig themselves into debt with nothing more than a credit card.

Petraeus is in charge of the office of Servicemember Affairs at the U.S. Consumer Financial Protection Bureau, established by federal legislation passed in July 2010 with a mission that includes enforcement of 18 financial laws, and extending enforcement beyond banks to other financial institutions. She is married to Gen. David Petraeus, the current director of the CIA and former commander of international forces in Iraq and Afghanistan.

She came to Fort Harrison at the invitation of U.S. Sen. Jon Tester and was joined by Montana National Guard Adj. Gen. John E. Walsh, Montana Attorney General Steve Bullock and several local military leaders in a discussion on protecting soldiers from financial fraud and hardship.

Those problems range from unscrupulous lenders and debt collectors to simple poor planning — and of the combination of enforcement and education that aims to help.

Some financial problems start before troops are issued a uniform. Petraeus said one Air Force survey found that recruits entering basic training already held an average of $10,000 in debt.

The pitfalls are exacerbated by a lack of knowledge among both soldiers and the people they do business with. Frequently, troops and their families don’t know their rights, and it’s hard to find all the relevant information in one place.

Problems include landlords trying to illegally evict families of deployed soldiers and large banks illegally foreclosing on homes and failing to give credit-card interest relief as required in some cases under the Servicemember Civil Relief Act.

Problems of Pay Day Loans

Everyone at some point in their life has come into some kind of financial problem. One thing that may seem tempting to fix different financial issues is taking out a pay day loan. Even though this may be something that you are considering to help get you out of debt or to pay this month’s bills, you may want to take a closer look and see why pay day loans can be a problem.

First off you need to understand what a pay day loan is. A pay day loan may go by many names like a pay day advance, cash advance, or deferred deposit loans, but in the end they are all the same thing. These are short term loans that normally are supposed to be paid off by your next pay check or pay period. Lenders will normally require you to put down some kind of security for the loan like a check or pay check. Since it is a “pay day” loan, you have to give proof of employment to show you do actually have a pay day. There are no limits to what you need the loan for and you don’t have to give lenders a reason why you need the loan. There is normally no credit check involved for this type of loan.

One of the main problems of these loans is their interest rate. These interest rates can be extremely high causing you to owe more than what you originally took out. Some lenders also put on extra fees and APR, which then when it comes time to pay back the loan, there is no way for the borrower to pay it back in full. This creates a vicious cycle for people trying to get out of debt. Of course this may not be the case with all lenders, but when it comes to getting quick cash remember, nothing is free.

If you have bad credit and think that taking a pay day loan will boost your score because it is a loan, thing again. When a lender looks at your credit history and sees that you have taken out a cash advance or pay day loan, it won’t look good. Having this on your credit history may send a wrong message to lenders by saying you already have trouble paying bills or staying on top of your money. Of course since the reason they look at credit score and history is to assess what kind of risk they may be taking on loaning you the money, you don’t want them to think you already have financial troubles. These loans can also take a toll on your score because if you do fall victim to the debt cycle, it will reflect in your credit report.

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