Credit Unions

Navy Federal Deploys Financial Literacy To The Front Lines

Frequent deployments and transfers can leave many military families dependent on a single income source. A lack of financial education can leave them vulnerable to risky products, like costly payday loans. In the latest Credit Union Tracker, Jaspreet Chawla, VP of membership at Navy Federal Credit Union, tells PYMNTS how overseas deployments often disrupt financial lives — and why addressing their needs includes tailored solutions, such as giving early access to paychecks a day before payday.

Those who opt for a career in the military understand the challenges and risks all too well. Servicepeople shouldn’t have to worry about money with everything else on their plates, but living a highly mobile lifestyle, dealing with dangerous work conditions and managing overseas deployments can make it difficult for them to manage their personal finances.

One financial institution (FI) looking to cater to servicepeople’s unique needs is Navy Federal Credit Union (NFCU), which holds more than $92 billion in assets and currently serves over 8 million members of the U.S. Army, Navy, Marines, Air Force and Coast Guard, as well as Department of Defense employees, civilian employees, military veterans and their families. Its goal is to help its members and their families remain financially healthy during their service, deployments and beyond.

The highly unpredictable nature of military service means it’s important to ensure members have access to financial literacy tools that help them deal with their financial realities, according to Jaspreet Chawla, NFCU’s vice president of membership.

“Generally speaking, the financial challenges military personnel face are related to their unique, ever-changing lifestyle,” she said. “They are on the move every two years, [and] they have deployments or [have to] change duty stations.”

PYMNTS recently caught up with Chawla, who stressed the importance of arming military personnel with financial know-how and explained the ways NFCU helps its members stay vigilant against potential financial threats.

Protecting Troops From Payday Loans

Servicepeople live by the needs and demands of their profession. These demands, which include moving from base to base, or even country to country, can put a strain on them and their families — often in somewhat unexpected ways. Family members may have to find new jobs after relocation, for example, and children may have to change schools.

“Being in a family that moves regularly, it can be difficult for a non-active duty spouse to always be employed, making the family more reliant on one income,” Chawla explained.

This makes military members particularly vulnerable to short-term financial offerings that help them pay bills and meet expenses, and leaves them worse off over the long term. Taking on payday loans or other short-term lending options can make it more difficult for them to build up a robust savings account or work toward future financial goals.

In hopes of preventing them from falling into these financial pitfalls, NFCU works to educate members, and their families, early in their careers. It currently boasts more than 300 branches, many on or near domestic and overseas military bases. The CU provides members with offers, like discounts on active-duty-specific loans, and helps them open credit cards and receive approval for home or auto loans, among other financial services. NFCU can also provide active duty military members with access to a paycheck one day early through direct deposit.

These offerings aim to provide members with the support they need to live healthy financial lives, Chawla explained, and prevents them from looking outside the credit union for financial help that could potentially come at a higher cost.

Enabling Enlistees Through Education

Sometimes, simply offering support isn’t enough — particularly if that support doesn’t reach servicepeople when they need it most. Getting in front of them at the beginning of their careers is crucial for the success of NFCU’s efforts, Chawla claimed.

“Our goal is always to get in front of them as they’re enlisting,” she said, noting that the CU recently made a presentation to a group of recruits who were about to deploy to Djibouti.

These efforts allow the CU to help members create strong habits early on in their financial paths, an important step toward building long-term customer relationships. Military personnel can find themselves in dire financial straits if those good habits are not formed early.

A 2017 NFCU survey found that roughly 73 percent of millennial-aged service members do not have an emergency fund, and 65 percent say they’re not saving for retirement — figures on par with trends seen among the broader millennial population. Younger members are also prone to questionable financial purchases, Chawla noted.

“There are multiple stories where you’ll hear a young recruit come in and say, ‘I want a sports car,’” she said. “That’s not generally the best thing for them when they’re starting out in their military careers.”

As such, NFCU works to help its younger members make more informed financial decisions.

In addition to offering auto loans, the credit union educates members on the vehicle purchase or lease options that make the most sense for their financial situations. Education is a two-way street, Chawla said, and NFCU often looks to its military members for lessons. It holds focus groups to understand how members’ financial challenges evolve, which sometimes involve visiting members in their homes.

This engagement aims to put the credit union in a more suitable position to serve military members than their larger bank counterparts.

“We are capped at an interest rate on our side as a credit union, whereas banks are not, and payday lenders aren’t either,” Chawla noted. “We have the best interest [rate] for them. We’re here to help them build their credit, repair their credit and explain the ‘why’ behind their questions.”

The ever-changing military lifestyle requires a specialized, hands-on approach to addressing the financial needs of armed forces personnel. Offering this level of service, and more fully understanding their members, helps credit unions outperform banks, she added. CUs offer services closely tuned to their members’ unique financial needs and provide a more personalized level of service — something that is especially crucial for servicepeople.

After all, the men and women serving their country have enough to worry about.

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