Defense Credit Union Issues

Updated December 29, 2008

Financial Readiness Challenge

The Under Secretary of Defense for Personnel and Readiness, Dr. David S. C. Chu issued a memorandum titled “Financial Readiness Concerns” in which he outlines deep concerns with the current economic situation and the effects that it has on the overall mission readiness of Service members.

You can find a copy of the Secretary’s memo in the Related Files section below.

The department is creating a “Financial Readiness Challenge” in which Commanders may request that the DoD Office of Personal Finance and Transition coordinates an all day financial readiness event. A sample of the topics that would be covered is attached to the Secretary’s memo.

NAFCU is working with this office in order to pass the information to the credit unions that operate aboard or support military installations so they can be participants in this initiative.

Defense credit unions have a direct impact on the overall readiness of our troops. This DoD initiative establishes a platform in which defense credit unions can continue their financial education efforts and the positive impact that we have with the troops and their families.

There is more to come on this program and as soon as we receive more guidance from DoD we will promptly pass it on to you.

Military Saves

The campaign to build wealth and reduce debt couldn't be more timely. A healthy savings account and low or no debt load is a military family's best approach to challenging economic times. Military members have solid benefits and steady paychecks, and are in a terrific position to save money out of each one of those paychecks.

Military Saves is a collaborative effort by the military services, the Department of Defense, non-profit organizations and associations, and financial institutions to provide both a favorable climate for saving money and attractive accounts in which to save. People buy what they are offered, and Military Saves financial institutions offer military families the absolute best in savings and investment products. The quality and variety of products offered by defense credit unions gets better and bigger every year. As we enter the third year of the campaign and expand our scope and messaging, we applaud our credit unions for matching our efforts with unbeatable incentives, returns, marketing, and member care.

The new in 2009 quarterly themes -- Save and Invest, Military Youth Saves, Debt Reduction, and Save for Retirement -- invite more creative product development and packaging, and offer year-round promotional opportunities. Build wealth, not debt!

The 2009 Military Saves Week will be held from February 22 to March 1.

Materials are available at: http://www.militarysaves.org/resourcekit/default.asp

AAFES/JP Morgan Chase Credit Card

NAFCU has been engaged both with the Department of Defense (DoD) officials and Congress in order to ensure that this product does not violate longstanding DoD regulations.

Many Members of Congress along with the individual services have expressed concerns over the violations of DoD regulations. It is our belief that that this card is in violation of DODD 1000.11 par. 4.1.1, also known as the one bank, one credit union rule.  And that by AAFES advertising and providing the application for this card it adds a third financial institution to the base financial services in violation of DODD 1000.11 par. 4.1.1

We also hold that DoD Financial Management Regulation (FMR) Volume 5 Chapter 34, 340403 states that Military Exchange Services cannot distribute literature from off-base financial institutions if there is an on-base financial institution.  And that DoD FMR Volume 5 Chapter 34, 340410-A states that retail banking operations shall not be performed by any DoD component or non appropriated fund instrumentality including the Military Exchange Services and MWR activities.

On base credit unions provide a full range of financial services to the armed services and their families under a contract with each base (to include credit cards).  The on base credit unions are able to develop a relationship with our men and women in uniform and their families and provide them with the necessary financial education to establish and maintain good credit, as well as determine the financial products that are right for them.  This is in direct contrast to the credit card being offered by AAFES, which can and will lead to more debt, without an upside of promoting savings good financial habits.

Related Files

Memo on Financial Readiness by Under Secretary for Defense, Dr. David Chu.

DoD Report on Implementation of Limitations on Terms of Consumer Credit Extended to Service Members and Dependents.