The Pentagon is initiating a new effort to warn service members about the dangers of so-called payday loans.
The businesses are known for giving quick cash advances at high interest rates and exorbitant fees.
A study released last month found "irrefutable geographic evidence" that payday lenders actively and aggressively target military personnel.
"Typically, a payday loan of $100 will cost the borrower $17 for two weeks. The average payday loan is about $500, so now we're talking about a fee of $85,” said John M. Molino, deputy undersecretary of defense for military community and family policy
"By itself, that's not a big problem," Molino said. "However, when you consider that it is not uncommon for that military member to roll the loan over four or five times, that $85 will grow exponentially to the point where you are paying an enormous amount of money for the relatively meager amount of the loan.
"It got you through payday, but if you weren't able to pay it off, now it's two more weeks, and two more weeks, and you're paying nearly 500 percent interest annually. That's a lot of money to pay," he said.
But, the payday lending industry says it targets middle class consumers in the suburbs, not the military and one spokesman estimates military personnel account for jut one percent of their customers.
Still, one defense official says the military will begin teaching service members how payday loans can lead to an endless cycle of debt.
