Service Personnel Have High Risk of Credit Card Debt
A recent survey suggests that young military servicemen are at a particularly high risk of developing credit card debt.
Due to the nature of their pay schedule and the amount of time they spend away from home, many of these men and women pay nothing more than their credit card minimums while on active duty. When they return home, they have hefty late fees, interest charges and cash advance fees to pay.
The latest FINRA Foundation Military Financial Capability survey suggests that 49% of troops pay off their credit card balances in full each month. This may sound like a good statistic, but that means that over half of the people in the military still have lingering balances at the end of the month.
In most cases, it is the young service personnel who carry the highest balances because they have limited financial experience. This puts them in a financial bind once they return home.
39% of those surveyed said they only pay their minimum credit card payments each month, at least part of the time. 57% said they carry a balance that accrues interest.
The Military Lending Act offers limited protection for our service personnel in regards to short term lending, but it does not protect them against high fees on credit cards. Thus, many of them become victims of these fees while serving our country.
What can be done about this? That’s still up for debate. Some say better financial education would help our service personnel learn to better manage their money. Others say it is up to the credit card companies to offer special policies for men and women in the military.
No matter what the solution may be, the stats clearly show something has to be done.