Protecting Your Wallet

July 24, 2015

President Obama announced new rules to protect servicemembers and their families from predatory lending practices.

The new protections will cover all forms of payday loans as well as other loans that target military members and their families: car title loans, refund anticipation loans, deposit advance loans, installment loans, unsecured open-end lines of credit and credit cards.

A DoD statement on the change said, “With this action, the department takes an important stand against companies that can prey on our men and women in uniform. This new rule addresses a range of credit products that previously escaped the scope of the regulation, compromising the financial success of our troops.”   

MOAA worked with its partners in The Military Coalition to help pass the original Military Lending Act. The original law capped interest rates at 36 percent for a limited number of covered loans to active duty servicemembers and their families.   

But payday lenders often found loopholes and other ways to skirt the law.   

“Today's rule change is a major victory for military families,” said Col. Mike Barron, USA (Ret.), MOAA's Deputy Director of Government Relations. “There are more payday lenders in America than there are Starbucks and McDonalds. These institutions prey on vulnerable military families and put them in a cycle of debt.”  

The new rule allows for industry compliance by October 1, followed by a staggered implementation period.  

For more financial tips and information from MOAA, check out our Financial Frontlines blog