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Low-interest loans can help families survive furloughs

Jul. 9, 2013 - 02:19PM   |  
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As the prospects for ending sequestration grow dimmer, many Defense Department civilian employees are bracing for furloughs that will amount to a 20 percent pay cut each week for up to 11 weeks, starting July 8.

Most service members are exempt from the furloughs, which require taking one day of unpaid leave per week. But the military community will hardly escape unscathed; many spouses are federal civilian employees, as well as many military retirees. For example, an estimated 40,000 Army spouses are federal employees.

If you find yourself in a furlough-induced financial bind, there are options. First, check with the personal finance program managers on your installation, generally at the family center.

Check also with your military relief society, which can offer emergency financial assistance — grants or interest-free loans — on a case-by-case basis, whether the problem is generated by sequestration, furlough or any other unexpected challenges that upset financial stability.

Military-affiliated banks and credit unions, large and small, have programs to help ease some of the hardship, such as deferred payments, or low- or no-interest loans.

“DoD civilians are being assured that credit unions are there to support them as well,” said Roland A. “Arty” Arteaga, president of the Defense Credit Union Council.

Programs vary, but there’s a common element: The institutions want customers to call or come in to discuss solutions for their individual circumstances. “This is not one-size-fits-all,” Arteaga said. “Customers need to sit down with a counselor.”

Some of the assistance available:

■ Navy Federal Credit Union has set up a sequestration hotline at 877-874-0042. Federal civilian employees with direct deposit who are subject to furloughs are eligible for a 3 percent rate on the checking overdraft line of credit through June 30, 2014; those who need need to redeem certificates of deposit before maturity can do so without penalty.

■ Armed Forces Bank. The many options include installment loans and a current 1.99 percent interest rate on home equity lines of credit.

■ AmeriCU Credit Union has set up a helpline, 800-405-1366.

■ Service Credit Union’s sequestration hotline is 800-936-7730 (U.S.) or 00800-4728-2000 (Germany). Options include a 0 percent “sequestration loan” up to $6,000 for members with existing direct deposit, repaid over 18 months, with no payments for the first 90 days; or no penalty on early withdrawal of certificates of deposit.

■ Fort Campbell Federal Credit Union offers loans up to $2,500 at 5.99 percent APR, with 0 percent APR for the first 60 days, no payment for 60 days and a 12-month repayment term. Members can defer a payment on a regular consumer loan at no charge.

■ Scott Credit Union offers members loans of up to 100 percent of their previous month’s net pay, up to $5,000, at 0 percent interest for the first 60 days, then the rate goes to 4.75 percent for the 12-month term loan.

■ USAA offers special payment arrangements, refunds of certain fees for credit cards and other bank products, early withdrawal from certificates of deposit without penalties, and special billing arrangements for insurance products.

These examples just scratch the surface of what’s available. Check with your financial institution on the options available.

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