by John P. Allen
The Pentagon Federal Credit Union Foundation is a nonprofit national charity working to meet unmet needs of the military personnel and their families in the areas of financial literacy, housing and support for the wounded. One of their main programs is the ARK Program.
ARK provides a no-interest alternative to predatory lending. To date, the program has helped some 1,000 military families with nearly $500,000 worth of emergency loans and financial counseling from the highly regarded Consumer Credit Counseling Service.
Fees for predatory payday loans can be an astronomical $19 for each $100 borrowed until payday. Through ARK, one can to borrow up to $500 at a flat fee of only $6, with no interest, until the next payday. Contrast that with predatory lending fees of up to $95 for a $500 advance for two weeks.
- No credit report is pulled because those with emergency cash needs have already exhausted their options.
- No interest is charged – just a flat $6 processing fee. With ARK, you don’t fall further into debt.
- Immediate cash advances up to $500 (or 80% of net pay) are available until the next payday
- There’s minimal paperwork – just a simple one-page form
- It’s completely confidential – we don’t tell anyone who has come to see us.
- Up to five advances are available, but after the first ARK advance, the ARK user must sit down with a local Consumer Credit Counselor identified by the Foundation.
ARK was designed to be as easy as a payday loan, but without the negative consequences. The goal is to rebuild or repair credit, improve cash flow and increase money-management skills.
How does payday lending work?
Take the example of an E-4 who need $500 emergency cash until she gets paid in two weeks. She takes her military pay stub, photo ID and personal check post-dated for $595 to a payday lender near the base. The extra $85 is the fee for making the loan ($19 per $100 borrowed for two weeks).
At the end of the two weeks, the payday lender cashes the check. If the E-4 has continued financial difficulty, the payday lending will gladly refinance the now $595 loan for $613 and it just grows from there. Nationwide the average payday loan borrower, because of these rollovers, repays $793 for a $325 loan.
Kudos for ARK
The ARK program was reviewed and approved by the leadership of Consumer Federal of America, Armed Services YMCA, the National Military Family Association and the American Society of Military Comptrollers.
- ARK is not a for-profit program. The low $6 fee is priced at only the minimum required to cover the cover the cost of making the loan.
- While ARK offers low-cost loans, the ultimate objective of the program is to help military families better manage their money and their debt.
The Pentagon Federal Credit Union Foundation is dedicated to assist the men and women and their immediate families in the Department of Defense and Homeland Security. This includes both uniform and non-uniform personnel. Our Military Heroes® program provides support to those wounded in the war against terrorism. Given the large numbers of wounded and the long-term nature of their challenges, the government faces budget and logistical problems in meeting their needs. That’s where the Foundation steps in to help.
Military personnel and their families face financial stress due to relatively low pay, extended deployments and combat injuries. Payday lenders target those in the military because they have regular paychecks and must pay their bills or risk losing their security clearances. The Asset Recovery Kit (ARK) gives no-interest emergency cash loans and free professional counseling to help solve money problems.
The Pentagon Federal Credit Union Foundation was founded on these fundamental values:
- Perhaps more than anyone, military heroes deserve secure financial futures for themselves and their families.They should be able to take hold of their piece of the American Dream.
- Giving back the most we can to our country’s military men and women is essential. That’s why we are proud that 100% of contributions go to our programs. We can do this because Pentagon Federal Credit Union pays all administrative costs of the Foundation.
- No one – and especially not military members and veterans – should be excluded from building a secure future. Sound financial practices are blind to race, class and gender. Inclusiveness and diversity in our leadership, partners, program participants and members is essential for success.
- We can make a difference. We all should support our country’s heroic military men and women who may be financially distressed.
- Partnering with others is the most cost-effective approach to reaching the most people and achieve the greatest good.
- Strengthening the financial decision-making skills of our defense personnel is an indispensable element in military preparedness. By helping individuals, we are also helping America.
DONOR OF THE MONTH
Funded by donations, the Pentagon Federal Credit Union Foundation Thanks their Donor of the Month.
Innospec is a business focused on providing new products and solutions for the global specialty chemicals market. It is a dynamic and forward-thinking company, built on strong company values with a passionate commitment to sustainable development.
Patrick S. Williams is Innospec’s Executive Vice President and President Fuel Specialties. He comes from a family who has been dedicated for generations to serving our country.
His father, Richard, served 20 years in the Air Force as a pilot of 16 different kinds of aircraft; serving in Vietnam, as a commander of Air Force Academy flying programs, and as director of NORAD battle staff and training. Patrick’s mother, Betty, taught for 34 years and was nominated three times as "Teacher of the Year."
Patrick Williams’ brother Stephen has served 21 years in the Army. His positions include Commander of the Alaska Army Guard Aviation; Deputy NATO Commander in southern Afghanistan, for which he received the Silver Star, Bronze Star and British and Canadian awards, and the Joint Chiefs of Staff as Director of Strategic Activities, Army National Guard.
Brother Mark serves as an Army Ranger/Special Operations Command and is currently on his third tour in Iraq. He is a recipient of numerous awards including the Bronze Star, Warrior Citizen and Global Terrorism awards.
- Pentagon Federal Credit Union pays for the Foundation’s administrative costs; therefore 100% of donations go to our programs.
- The Foundation’s External Auditor: Ernst & Young, LLP
- Accepted for inclusion in the Combined Federal Campaign for the National Capital Area; 2007 code # 77273