Members of the armed forces and UK ex-servicemen are being warned to compare interest rates if they are considering taking out a instant cash loan.
The MP for Walthamstow, Stella Creasey, has uncovered evidence that companies offering instant cash loans are deliberately targeting armed forces personnel.
Several short-term loan companies have a special website specifically for military personnel; quickquid.co.uk being a prime example.
The site praises the military for the security and protection they provide and tells them that military loans are available to protect them against financial problems. APR for someone repaying their loan when they receive their next salary is quoted as 2222.46%.
Worryingly, another site, www.easymilitaryloans.co.uk does not have a fixed interest rate and can therefore charge what it likes!
The Royal British Legion recently said that unsecured payday advances cause 33% of all the debt problems its Money and Benefit Advice service comes across. The Legion expects to deal with around 10,000 current and ex-service personnel with debt related problems in the coming 12 months.
Maybe the British government should consider a similar system to that in place in the United States. The Servicemembers Civil Relief Act protects members of the US forces from exorbitant interest rates by forcing lenders to cap the rate it charges on loans.
Ms Creasey is urging the British government to learn from this and commission research into the reasons why our servicemen are getting into financial difficulties and putting a cap on the cost of credit so that the military can get affordable credit from a dedicated forces credit union.