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Military Session FDIC Conference: Affordable Alternatives for Responsible Short-Term Credit. Marcus Beauregard DoD Financial Readiness Campaign. Signs of financial problems (junior enlisted, 3 – 5 years of service): 11% bounced checks 19% failed to make minimum credit payments

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Military session fdic conference affordable alternatives for responsible short term credit

Military Session

FDIC Conference:

Affordable Alternatives for Responsible Short-Term Credit

Marcus Beauregard

DoD Financial Readiness Campaign


Military statistics

Signs of financial problems (junior enlisted, 3 – 5 years of service):

11% bounced checks

19% failed to make minimum credit payments

5% fell behind paying mortgage or rent

21% were pressured to pay bills

12% had telephone, cable or internet cut off

3% had water, electricity or heat shut off

2% had car, appliance or furniture repossessed

6% failed to make a car payment

12% got a payday loan

1% filed for bankruptcy

Defense Manpower Data Center Survey of Active Duty Service members, March 2005

Military Statistics

(average roll-over of 4.9 times)


Department of defense perspective

DoD views personal finance as important to force readiness of service):

Part of the Social Compact

Tracked in evaluating the “Status of the Force”

Payday lending carried as one of ten top issues discussed with states

Military personnel are potentially vulnerable to payday lenders

Culture emphasizes self-sufficiency

Separated from family support/guidance

May be financially naïve

Use of returned checks and nonpayment of bills are not options for short term credit

Article 123a. of the Uniform Code of Military Justice

DoD Directive 1344.9, Indebtedness of Military Personnel

Department of Defense Perspective


Art 123a making drawing or uttering check draft or order without sufficient funds

Any person subject to this chapter who-- of service):

(1) for the procurement of any article or thing of value, with intent to defraud; or

(2) for the payment of any past due obligation, or for any other purpose, with intent to deceive;

makes, draws, utters, or delivers any check, draft, or order for the payment of money upon any bank or other depository,knowing at the time that the maker or drawer has not or will not have sufficient funds in, or credit with, the bank or other depository for the payment of that check, draft, or order in full presentment, shall be punished as a court-martial may direct.The making, drawing, uttering, or delivering by a maker or drawer of a check, draft, or order, payment of which is refused by the drawee because of insufficient funds of the maker or drawer in the drawee's possession or control, is prima facie evidence of his intent to defraud or deceive and of his knowledge of insufficient funds in, or credit with, that bank or other depository,unless the maker or drawer pays the holder the amount due within five days after receiving notice, orally or in writing, that the check, draft, or order was not paid on presentment. In this section the word"credit" means an arrangement or understanding , express or implied, with the bank or other depository for the payment of that check, draft, or order.

ART. 123a. MAKING, DRAWING, OR UTTERING CHECK, DRAFT, OR ORDER WITHOUT SUFFICIENT FUNDS


Dod directive 1344 9

4. POLICY of service):

4.1.Members of the Military Services are expected to pay their just financial obligations in a proper and timely manner. A Service member's failure to pay a just financial obligation may result in disciplinary action under the Uniform Code of Military Justice(reference (e)) or a claim pursuant to Article 139 of reference (e). Except as stated in this subsection, and in subparagraphs 4.1.1. and 4.1.2., below, the DoD Components have no legal authority to require members to pay a private debt or to divert any part of their pay for satisfaction of a private debt.

DoD Directive 1344.9


Dod social compact and financial readiness campaign

Social Compact Vision for Personal Finance: of service):

Military Culture values financial literacy and responsibility

Financial Readiness Campaign

Objective: Increase personal readiness by reducing the stressors related to financial problems

Increase awareness and abilities

Increase savings and reduce dependence on credit

DoD Social Compact and Financial Readiness Campaign

  • Increase protection against predatory practices

  • Target Audience: Spouses and junior enlisted


  • Financial readiness campaign and credit alternatives

    Savings and reduced dependence on debt as alternative of service):

    Educate Service members and spouses on effective money management

    DoD Instruction 1342.17, Personal Financial Management Programs for Service Members, requires basic money management competence

    Military Services provide basic courses to support requirement

    Partner organizations are providing supplemental education

    Financial Readiness Campaign andCredit Alternatives

    • Social marketing campaign

    • Developing Service-level campaigns


    Additional credit alternatives

    Credit counseling and debt management of service):

    Chronic use of dishonored checks, overdraft protection and payday loans are symptoms

    Spiral of debt eventually ends in counseling/debt management

    Counseling offered through Family Support Centers, Military OneSource and partner organizations

    Debt management being offered through partner organizations

    Positive products and services

    E-Duction Clear Card

    Short-term loans with financial education

    Additional Credit Alternatives


    Alternative ideas for financial institutions

    Products tied to savings and established credit of service):

    Products with automatic allotments to savings

    Savings incentives

    Savings overdraft protection

    Line of credit overdraft protection

    Installment loans tied to direct deposits and education

    “Just-in-time” education and assistance

    Additional educational assistance for newly banked

    On-line budgeting and recordkeeping tools tied to checking accounts

    Opportunities for education/counseling when overdrafts and delinquencies occur

    Bottom line: Help break the cycle of debt and help clients work within their financial means

    Alternative Ideas for Financial Institutions


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