News Release 7/1/2014

 

PenFed Foundation Emergency Loans Help Military Families Avoid Payday Lenders

Washington, D.C. (July 1, 2014) - New measures to ensure military families do not have to rely on predatory lenders have won the endorsement of the Pentagon Federal Credit Union Foundation (PenFed Foundation). As the Pentagon considers tighter restrictions on high-interest, short-term loans, the PenFed Foundation reminds service members and their families that it provides an alternative to predatory lending with hassle-free emergency loans through the Asset Recovery Kit (ARK) program.

 

“We’ve heard a lot recently about service members taking out payday loans with as much a 19 percent interest rate or even higher,” said Jane Whitfield, president and CEO of the PenFed Foundation. “High-interest loans don’t solve a military family’s financial problems, they just make them worse. Predatory lenders can end up further sapping a family’s financial resources and even damaging their credit report, so we came up with a better option.”

The Department of Defense is considering tightening rules written under a 2007 law aimed at limiting predatory loans to military families. At the same time, the PenFed Foundation has a safe and effective alternative. Under the foundation’s ARK program, qualifying active duty, reserve, and National Guard military personnel can borrow up to $500 during an emergency with a flat fee of just $5 and no interest payments. A credit rating is not required for the loan and the only requisite is that the recipient must later meet with a local consumer credit counselor.

“We don’t want to just patch over the problem,” added Whitfield. “In many cases, recipients of the loans got into trouble in the first place because they need more education on how to manage their money. We want to help get them out of the situation they are in and make sure they don’t just get into another one. Credit counseling is an effective way to learn those much-needed financial skills.”

To learn more about the PenFed Foundation’s ARK program, go to: www.pentagonfoundation.org/site/PageServer?pagename=ark_index