By Ray Birch
WASHINGTON—American servicemembers have become increasingly vulnerable to the predatory lenders that have flocked near the gates of military bases, according to Anthony Hernandez.
Hernandez, president and CEO of the Defense Credit Union Council (DCUC), described the current environment as “dangerous times” for many of those who serve our country.
“When you can’t put food on the table because you’ve got to pay off predatory lenders, well, the situation just gets worse,” said Hernandez.
What has the DCUC leader even more concerned as those high-interest-rate lenders are preying upon service members, who are often young and vulnerable, at the same time inflation, high gas prices and supply chain issues have been challenging military members’ household budgets at a level not seen in recent years.
“With food insecurity already somewhat of an issue for military families that live off base, the current economy is only making matters worse,” said Hernandez. “As a result, I think a lot of these shady businesses that are just off the base are looking more appealing to military members as another way to help make ends meet. It's a very dangerous time for a lot of servicemembers and they need help.”
Seeing the Bigger Picture
Military credit unions have always provided strong financial education and guidance to servicemembers, pointed out Hernandez. He said they focus on short-term needs—which he acknowledged could become even more important as a recession may be ahead—and the long-term financial success of members.
“While they are helping you make ends meet, military credit unions also look at the overall financial health of the members and seek ways to help them have a successful financial future, such as offering to restructure their debt,” he said.
Hernandez shared his concerns shortly after the New York Times published reporting that highlighted how servicemembers are facing threats from predatory lenders.
‘Nothing New’
Anthony Hernandez
But Hernandez said that story isn’t a breaking headline.
“Their presence is nothing new,” said Hernandez about businesses that prey on the military. “They've always been outside the gate. It's just that the economic pressures are different now coming out of the pandemic, and now with all the inflationary pressures. We believe that service members are
more at risk than ever. And the role of defense credit unions is to help keep members out of that kind of trouble.”
The Department of Defense does offer counseling to service members, but is not as effective as credit union counselors, asserted Hernandez.
“The DoD counselors can only offer broad information, not specialized information,” he explained. “Military credit unions know their members closely. For example, they can see account transactions and see where the money is going. They can make more tailored recommendations to help the individual member much better than the DoD.”
Joint Letter to House
The concerns led DCUC to recently partner with CUNA on a joint letter to the House Subcommittee on National Security, stating that military credit unions are the best line of defense against predatory lenders located outside military bases.
“While the DoD is currently spending taxpayer dollars to train and hire in-house financial advisors, it simply is not the same quality education servicemembers already get for free from the credit union,” Hernandez said. “Plus, there is an important trust factor to consider. Survey after survey reveals servicemembers are less likely to share personal financial data with someone in or associated with the chain of command. If a military member has mismanaged their finances, finds themselves in a troublesome situation, or cannot make ends meet, the last person they want to tell is their boss, commander, or government contractor.”
Problems Are ‘Masked’
Hernandez said often leads to a situation where financial problems among military members remain “masked.”
“Financial wellness, then, simply fails to improve,” he said. “Credit unions offer a natural, and safe alternative and provide this service for free.”
Hernandez pointed out the letter to the House subcommittee emphasizes credit unions are the first line of defense against many “unscrupulous and predatory actors located off the installation.”
“Defense credit unions take this role very seriously and take pride in maintaining our nation’s military readiness,” Hernandez added.
‘More Trusted’
Hernandez reiterated that defense credit unions are uniquely positioned to protect the nation’s servicemembers and to help them build financial wellness.
“We believe our member credit unions are better informed, better resourced, and more trusted to help servicemember on improving their financial health,” he said. “In the end, it is not about money, it is about life, family, and protecting the things we all care about.”