NORFOLK, Va. — Credit unions came together last week to share their successes in serving the unique needs of the military during NCUA's Economic Empowerment Summit held Oct. 3. NCUA Office of Small Credit Union Initiatives Director Tawana James explained that 17% of the military are actively engaged with predatory lenders, but she highlighted two credit unions chipping away at the market share. She explained that the military was a prime target for payday lenders because most are under 25 and financially inexperienced, lack a savings cushion in hard times, and are paid regularly with little likelihood of quitting or being downsized. "They didn't need the DoD report to tell them that," James said, referring to the recent Department of Defense report on predatory lenders taking advantage of military personnel, in introducing the two executives from the credit unions.
"The unique challenge Marine Federal Credit Union faces in 2006," Marine Federal Credit Union EVP Chuck Collins stated, "is how you deal with the deployment of about 40,000 members." The institution learned from a focus group of some expected issues concerning deployment, but they were also a bit surprised to learn that personnel ended up with too much cash on hand because of deployment pay and that having paper checks on hand can be helpful overseas when debit cards do not work properly.
The credit union also looked at its own call center issues; they were overwhelmed with wire transfer requests, fraud/transaction disputes, lost/malfunctioning debit cards, bill payer requests and identity theft issues.
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Marine Federal wanted to be prepared when 25,000 more of its members are deployed again in February, Collins said. Meetings were held with base command to inform them of financial counseling available from the credit union where staff would show them how to set up bill pay and how to develop a budget. A better investment option was also made available to deployed members of the military for that extra cash with a higher yield and without withdrawal penalties.
"Management and staff know we can find a way to bend rules to make life easier" for the service members. Marine Federal has informed its collectors that if a member is confirmed deployed they are "hands off." If a car is being repossessed or had to be abandoned in a repair shop for deployment orders, the credit union will store it until the member comes back to avoid storage fees. The credit union linked up with CUNA's call center so it is available to service members 24/7 and has clocks in the call center offices showing the time in areas of major deployments.
Additionally, Marine Federal has a retired Marine on staff who goes around to the installations within the field of membership and discusses financial education topics like how to buy a car and debt management. He handles about 80 extreme cases one-on-one where the service member agrees to hand over their paycheck and receive an allowance while the counselor deals with the creditors.
Upon request from the wing commander at Seymour Johnson Air Force Base, where North Carolina Community Federal Credit Union is located, CEO Robert McKenzie explained that his credit union looked at ways to work on issues specific to its military members. According to McKenzie, Bank of America–also on base, turned the request down. What McKenzie's credit union came up with were loans to pay off the payday loans of military personnel. Despite North Carolina law prohibiting the product, it has been circumvented via the Internet and other methods. "I'd like to tell you this law totally eliminated predatory lending…but that is not the case," he said. The credit union has partnered with the base to offer financial education in addition to these loans to help the servicemembers gain their financial footing. "What's most pleasing about this program is we approve about 90% of applications we get each month," McKenzie said. North Carolina Community advertised the service in the on-base newspaper and handed out brochures. The first sergeants actually will sit in on the loan application process. Collins' credit union is also training the next generation of the military offering a financial literacy boot camp for teens who are dependents of Marine families. "We started it about two years ago and it's been just dynamite for us." The program, with interactive car and insurance buying games, has proven so successful an adult version was developed. –[email protected]
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