After all the hard work my colleague Warren Bolton has done fight predatory lenders here in South Carolina, it’s gratifying to see this finally taking effect:

New DoD Predatory Lending Regulation Takes Effect
            The Department of Defense today put into effect a new regulation that protects service members and their families from high-cost, short-term loans.
            The regulation limits the fees and interest that creditors can charge on three specific types of loans: payday loans, vehicle title loans, and tax refund anticipation loans. These three products were targeted because they have high interest rates, coupled with short payback terms.
            Payday loan and vehicle title loans can often lead to a cycle of ever-increasing debt. Refund anticipation loans provide seven to 14-day advances on tax refunds, but at a high cost to the borrower. The financial stress service members and their families suffer in turn causes a decline in military readiness.
            The new regulation is part of wide-ranging DoD efforts to increase ‘financial literacy’ among servicemembers and their families. These efforts include 24/7 access to confidential financial planning and counseling, a variety of financial readiness training courses, improving the availability of small low-interest loans from financial institutions, promoting the practice of setting aside a $500 emergency savings account, and educating service members on the availability of counseling, grants, loans and other services from military aid societies.

For more on the subject, here’s a report I heard this morning on NPR:

Morning Edition, October 1, 2007 ·
A new federal law bans predatory lenders from taking advantage of
military personnel and their families. Check-cashing stores around
military bases often charge annual interest rates of 300 percent. But
the new law caps interest at 36 percent for loans to active-duty
military and their families.

                        

Alison St. John reports from member station KPBS in San Diego.

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