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Credit Woes Intensify For America’s Career Military, First Command Reports

The First Command Financial Behaviors Index® reveals two out of five middle-class military families are experiencing credit difficulties

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FORT WORTH, Texas — Credit problems are on the rise in America’s military families, where concerns over sequestration and defense downsizing are bringing new stresses to bear on household finances.

The First Command Financial Behaviors Index® reveals that 39 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) experienced credit difficulties during the third quarter. That’s up 12 points from a year ago.

Survey respondents reported a variety of problems with both short and long-term credit products, including:

  • Increases in credit card interest (14 percent)
  • Reductions in credit card spending limit (11 percent)
  • Difficulties paying mortgage (11 percent)
  • Rejections of credit cards (10 percent)
  • Loan defaults or missed payments (10 percent)
  • Credit card defaults or missed payments (9 percent)
  • Rejections for major loans (9 percent)

Some of the fastest growing problem areas involve large debts. The percentage of military families experiencing difficulty paying their mortgage has almost doubled over the past four quarters (from 6 percent to 11 percent). A significant increase is also taking place among those rejected for major loans (from 5 percent to 9 percent).

Notably, the Index reveals that credit problems are on the decline in the general population. Just 29 percent of civilian respondents reported credit problems during the third quarter, down 6 points from a year ago.

“A shift in financial concerns is taking place between middle-class military families and their civilian counterparts,” said Scott Spiker, CEO of First Command Financial Services, Inc. “A rising economic tide appears to be lifting the boats of many middle-class families, but military households are experiencing a separate set of concerns related to sequestration and defense downsizing. In essence, military families are growing more likely to experience credit problems and civilian families are growing less.”

November survey results reveal that 70 percent of military respondents feel anxious about cuts to defense spending. That’s up 17 points from a year ago. In contrast, concern remains muted in the general population with 30 percent of civilian respondents expressing anxiety.

Roughly three out of four military families expect to be financially impacted by sequestration, and they are continuing to take action through a variety of positive behaviors. The Index reveals that 44 percent of November survey respondents say they are increasing the amount they are saving. Still, credit problems are on the rise.

“Loan defaults, missed credit card payments and rejected applications for new credit are particularly serious issues for servicemembers,” Spiker said. “They can result in the loss of security clearances, which can shut the door to many jobs in the military as well as potentially lucrative career opportunities after leaving the service. We are encouraged to see that a growing number of military families are responding to their sequestration concerns by turning to financial advisors for help. Our ongoing market research and more than a half century of serving military families have consistently revealed that those who work with a financial advisor display fewer financial concerns and more feelings of financial security and confidence than those who go it alone. By coaching America’s career military in the responsible use of consumer credit and other positive money behaviors, financial advisors can help these deserving families deal with the financial and emotional uncertainties of sequestration and defense budget cuts today so they can more effectively pursue their goals and dreams for tomorrow.”

About First Command Financial Behaviors Index®

Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. Financial Behaviors Index

About Sentient Decision Science, Inc.

Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.

About First Command Educational Foundation

First Command Educational Foundation (FCEF) has been proudly supporting scholars and their families since 1983. FCEF is a 501(c)(3) public charity, and has worked tirelessly to promote their mission to educate those who serve. To that end, FCEF has awarded over $4 million in scholarship grants to help offset the costs of higher education, and has educated over 60 thousand individuals on numerous financial literacy topics.

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.


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