MARINE CORPS BASE CAMP PENDLETON, Calif. -- The good life is just outside Pendleton’s gates — namely the finer things “easy money” and “instant cash” can buy.
Those and other tempting phrases are often dangled to lure servicemembers whose yearning power exceeds their earning power. But Mike Hire, a retired Marine who has made a second career out of helping servicemembers who’ve fallen on hard financial times, says it’s a trap.
“They shouldn’t go there at all,” said Hire, director of the Navy and Marine Corps Relief Society here, referring to payday lenders, dozens of whom are located minutes from the base.
Servicemembers who need to borrow should go to a bank before visiting a payday lender, he said.
“Marines and sailors use them (payday lenders) because on the surface it appears to be an inexpensive, easy way (for money), but it’s just the opposite,” Hire said.
He sees 50-60 people a month with financial problems stemming at least in part from payday loans, he said.
The Department of Defense — alarmed by servicemembers’ chronic use of payday lenders who charge as much as 100 percent interest — echoes Hire’s sentiments.
“The Department of Defense is engaged in an ongoing effort to educate servicemembers about the risks of payday loans,” said Air Force Maj. Michael Shaver, a DoD spokesman. “In particular, we want people to avoid the spiral of debt that results when servicemembers can't pay off the loans and sink deeper in debt.”
Shavers said crushing debt is a barrier to military readiness.
“There is a real potential for payday loans to impact the mission,” Shavers said. “If a Marine is worried about debt, he or she may not be focused on the mission.”
The problem starts when servicemembers need or want cash right away.
Payday lenders are happy to oblige. But these quick-cash deals often come with high fees or interest rates that balloon the amount a debtor owes.
“It's the people who can’t pay the loan and roll over the loan repeatedly, sinking deeper and deeper into debt, that are the real source of concern,” said Shavers, who touted programs to help troops facing short-term financial problems.
One of these organizations is the Navy and Marine Corps Relief Society. The society provides grants and loans for Marines and sailors in need. Marines and sailors seeking nonessentials need not apply.
Either way, Hire urged them to steer clear of payday lenders.
But too many servicemembers aren’t heeding the drumbeat of advice.
Department of Defense data reveals that 9 percent of all enlisted personnel and 12 percent of all mid-level NCOs take out payday loans.
A study conducted at the University of Florida and California State University showed payday lenders actively and aggressively target military members.
“They’re going to smile at you and take your money,” Hire said. “I use the word take because you will pay an exorbitant amount of interest.”