Association of Military Banks of America

Depart of Defense Announces New Policy on Service Member Allotments

The Department of Defense announced today a change to policy that will prohibit service members from using new allotments to purchase, lease or rent personal property effective Jan. 1, 2015.

Secretary of Defense Chuck Hagel directed the change following an interagency review conducted in response to a major enforcement action by the Consumer Financial Protection Bureau.

This policy change will eliminate that aspect of the allotment system most prone to abuse by unscrupulous lenders that prey on our service members. This will significantly improve protections for all service members and their families, while not significantly reducing the flexibility to use allotments for a number of legitimate purposes.

The change will be incorporated into DoD Financial Management Regulation and will apply only to service members and not to military retirees or DoD civilians. Additionally, it will not affect existing allotments or prohibit allotments made to savings accounts, support dependents, pay insurance premiums, pay mortgages, pay rents or fund investments.

For further information please see DoD’s fact sheet: