The fastest growing contributor to financial trouble is the use of the payday loans or predatory lenders.

These “payday pirates,” as I like to think of them, are not interested in helping you out. Trust me on that. They are interested in one thing, making money and making it off of you and if you use them they will win and you will lose. 

According to the Federal Trade Commission, a cash advance loan secured by a personal check - such as a payday loan - is very expensive credit. Here’s how it works. 

Say you need $300. Payday lenders will lend you the $300 against your paycheck for two weeks.

In return, you’ll be charged around $60 in lending fees.

If you can’t pay them back in the two weeks you can roll it over against the next paycheck.

After one month, you now owe $440 (more interest, lending charges). Each time you roll it over the charges and interest build.

They’ll tell you the fees are just $20 per $100 borrowed, and also say that many credit cards charge 24 percent interest or more. But that 24 percent figure is the annual rate.

Payday loans are two-week loans that turn into longterm debt and their annual interest rates can easily surpass 400 percent. This is not a good deal!

The payday pirate is making about $100 a month - $1,300 a year for every customer and spending only $300. It’s a great deal for them, but obviously not for you.

I cannot imagine anyone in his or her right mind signing up for a 400 percent loan.

Let me share with you the words of Rear Adm. William French up in the Pacific Northwest.

“I have personally witnessed the detrimental impact of payday lending on military families and the drain it has had on military readiness.”

Okay, I think now you know this is a huge concern for our Navy. We’ve got to engage at all levels. Payday pirates can have a huge impact on your credit rating, which helps you get a legitimate loan. Indebtedness can hinder your military career. It will cause a lot of stress at home and it can cause you physical and mental harm.

Let me also share with you some very sobering statistics sent to me from the Tacoma News Tribune editorial page. 

“The Center for Responsible Lending, a nonprofit organization that tracks this issue, says the average payday borrower winds up paying $800 on a $325 loan. And that’s just an average!

It’s common to hear of financially strapped young military personnel owing thousands of dollars on loans that were originally for hundreds of dollars.

This just makes no sense to me at all. Before you get to this point, talk to somebody—command financial specialists, your chief, your LPO, the chaplain, a peer, anyone but the payday pirate who is waiting for you outside the gate.

You chiefs, LPO’s and divisions officers should discuss this at every opportunity and by being proactive you will not become reactive. Some of the recommended things you should consider are as follows:

- Inform leadership when making a big purchase or if you are thinking of using a payday lender.

- Use the resources available to you to make an informed decision. Your CPO or division officer, command financial specialists, and the Fleet and Family Support Center (FFSC) has several programs to ensure your success.

- Live within your means. Do you really need the new truck? I drive a 1995 Mazda.

- When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR - consider a small loan from your credit union or small loan company, or a loan from family or friends.

- Compare the APR and the finance charge (which includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost.

- Ask your creditors for more time to pay your bills. Find out what they will charge - as a late charge, an additional finance charge or a higher interest rate.

- Make a realistic budget and figure your monthly and daily expenditures. Avoid unnecessary purchases - even small daily items. Also, build a savings. Even small deposits can help. Avoid borrowing for emergencies or unexpected expenses.

- If you need help on debt repayment or developing a budget, contact your local fleet and family support centers or command financial specialists. The FFSC currently has some outstanding classes.

I think it’s clear that I’m 110 percent against this practice and want to ensure you don’t end up in financial distress. So the next time money’s a little tight, go talk to an expert to help you find a way other than the payday pirate. I know you’ll make the right choice.

Fleet Tip: I recently found an outstanding Web site, http://www.militarymoney.com{{PERIOD}} I think this site would be worth a visit. Once on the site, look at the department section and click on money. You will see an article called, “Caught in a debt trap.” This will open your eyes even further.

Good luck.