Nonprofit serving armed forces says few realize financial problems faced
April 10, 2013, WASHINGTON — The Pentagon Federal Credit Union Foundation (PenFed Foundation) shared eight surprising facts about military families and their finances today to raise awareness as part of Financial Literacy Month about the problems service members and veterans face with their personal budgets.
“There is some good news about the financial situations of our nation’s military families, but not enough,” said Jane Whitfield, president and chief executive officer of the PenFed Foundation. “Serving our nation may not always be an easy task, but it should not mean that Americans have to endure financial hardship as a result.”
Studies of the military community from recent years show that service members struggle with many of the same financial problems as everyday Americans. But they also face unique situations as a result of their service which make it even more important that they have good credit and strong financial management skills as they make the transition back into civilian life, go back to school, and buy homes.
- A 2012 survey of 1,000 service members by the FINRA Investor Education Foundation found that 49 percent who had credit cards engaged in costly behaviors such as paying the minimum, paying late fees, going over their limit or getting cash advances.
- According to the FINRA 2012 Military Survey Report, service members were more likely than the national average to have three months’ worth of emergency funds, when compared with demographically similar groups of males aged 18 to 35.
- A study of more than 1,000 veterans of Iraq and Afghanistan in the American Journal of Public Health found that 30 percent had problems with money management and nearly one-third had gone over their credit limit, written a bad check, or been sent to collections.
- The FINRA survey found that 33 percent of service members had participated in financial literacy education offered by the military, more than had done so in high school, college, or at work.
- According to the FINRA survey, 35 percent of military service members have used at least one alternative borrowing method within the past five years, with pawn shops listed as the most commonly used.
- Interest rates on loans offered by some payday lenders which target military families can exceed 80 percent, according to an analysis by the Consumer Federation of America.
- Studies have shown that veterans make up about 20 percent of Americans without stable housing, even though they are less than 8 percent of the population.
- From July of 2011 to February of this year, the Consumer Financial Protection Bureau, a newly formed government agency, has helped military families receive more than $1 million in relief from improperly handled financial services.
Whitfield said the PenFed Foundation works to ensure its financial literacy programs as well as other efforts helping service members and veterans buying their first home, undergoing major medical care, or in need of an emergency short-term loan, help reduce many of these problems.
“Being in the military can be tough on your finances, especially when you’re just starting out,” added Whitfield. “Poor financial literacy can only compound the problem if it causes service members to pay high fees on their credit cards and rely on pawn shops and payday lenders. Later in life, those same troubles can even lead to homelessness, but we need to find alternatives to stop these problems before they start.”
About the Pentagon Federal Credit Union Foundation (the PenFed Foundation)
The PenFed Foundation is a nationally recognized nonprofit organization working to meet the unmet financial needs of military members and their families through supporting wounded warriors and providing the military community with financial management assistance and home ownership aid. Through a unique public-private partnership, the PenFed Foundation joined with the Department of Veterans Affairs to fund the new Lee and Penny Anderson Defenders Lodge, a $17 million project. PenFed (Pentagon Federal Credit Union) covers all labor expenses for the foundation so nearly every dollar donated goes directly to supporting its programs.
To make a donation or learn more about the foundation visit: www.penfedfoundation.org.
Contact: Alison Beckwith, 301-699-0148, media@penfedfoundation.org
