We owe a lot to the brave men and women who serve in our country's armed forces. And now I'm hoping that one recent measure passed to assist military personnel will serve as a template for all consumers.
The bill includes a provision capping annual interest rates on consumer credit loans - including on so-called "payday loans" - to service members and their dependents at 36 percent.
Payday loans are small, short-term, high-interest-rate loans, typically of a few hundred dollars. They go by other names: cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.
Under a payday loan, borrowers promise to repay the debt out of their next paycheck, usually in two weeks.
Fees charged for payday loans are usually a percentage of the face value of the loan, starting at about $15 for every $100 loaned. On an annualized basis, the fee charged on these loans can top out at 400 percent to 1,000 percent.
The payday loan industry has been accused of targeting the military and causing debt problems for many members of the armed forces. It's a claim the industry rejects, arguing that military personnel only account for 1.3 percent of revenue.
However, a study released by the Defense Department found that military personnel are three times as likely to use payday loans as civilians.
Payday loans are cheaper than bouncing a check or paying a late fee on a credit card, says Darrin Andersen, who is president of QC Holdings, a payday lender. His company and others are filling a need, he added.
To say that getting a payday loan is better than bouncing a check is like saying it is better to smoke one cigarette a day than two. Both are bad.
Helping the military steer clear of predatory, high-priced debt is a good thing. It would be even better if the legislation was expanded to include all consumers.