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Check Advance services may carry big financial costs
By Rob Schuette, Triad Staff

      Members of the Fort McCoy community who find themselves facing financial debt, such as paying off gifts purchased during the holiday season, may find themselves faced with unpleasant alternatives.

      Betsy Kelsey, Fort McCoy Family Advocacy Program manager and Financial Readiness Program manager, said the key to proper financial planning is education and understanding the circumstances of debt and the consequences of not being able to pay off debt in a timely manner. One of the more recent alternatives to pay off debts is the increasing availability of check advance or payday loan services, Kelsey said.

      "We are getting a lot of literature and stories from elsewhere in the military that these organizations are targeting Soldiers," Kelsey said. "The Soldiers see something that looks good and go into it. One of the things to remember is: 'If it looks too good to be true, it probably is.'"

      Kelsey said she has not directly dealt with Soldiers at Fort McCoy who use this service, but has heard that it is happening. During her talks with credit counselors, she has learned that these contracts appear to be legal and enforceable. The best advice she can give to Soldiers and other members of the Fort McCoy community is to educate themselves about what these businesses do.

      Check advance and payday loan businesses usually charge fees to, in effect, make a loan or advanced payment of money. Both the fees and amount of money received are due at the personnel's next payday. Kelsey said these businesses may or may not reveal interest rates, which can range up to hundreds of percent.

      "The problems start arising when many people can't pay back the entire amount, including fees, they owe," Kelsey said. "Then they keep paying fees, and may wind up paying hundreds or even thousands of dollars in fees (for the advance of a relatively small amount of money)."

      Although society often encourages instant monetary gratification, a better strategy is to know how to budget and use money wisely, Kelsey said. 

      The best advice to Soldiers and anyone else encountering financial struggles is to know the terms before they enter into a contract with a check advance or payday loan business, Kelsey said. Military personnel should keep in mind that excessive debt may jeopardize their career.

      A good place for members of the Fort McCoy community to start developing financial awareness is an eight-hour financial readiness training course available through Army Community Service (ACS). This is highly recommended for personnel, especially younger personnel, and covers the basics, Kelsey said. The training includes: locating and choosing a bank; budgeting; saving; investing; setting up checking accounts; establishing credit and using it wisely; and knowing consumer information.

      If people reach the point that they are financially stressed and can't afford groceries or can't pay the cost of an emergency, this information will help, Kelsey said.

      "You can't deny when there is a problem," Kelsey said. "If you are in excessive debt because you are living outside of your means without a spending plan or budget, a check advance or pay day lender is not the solution. Seek assistance in creating a budget that is realistic and one that you will be able to follow."

      Military personnel with emergency expenses may be eligible for assistance from such organizations such as Army Emergency Relief (AER), which is available through ACS at Fort McCoy. AER can provide no-interest loans or even grants to help Soldiers and their family members deal with emergency financial situations, she said.

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