Upon returning from a PBS Moneywise financial presentation for the military in Japan last fall, Hollister "Holly" Petraeus settled into her Arlington, Va., office at the Council of Better Business Bureaus.

While her husband, Gen. David Petraeus, heads the U.S. Central Command, overseeing wars in Iraq and Afghanistan, Holly Petraeus fights another war on U.S. soil as director of the Council of Better Business Bureaus' Military Line. Only her war is against the rip-offs and financial illiteracy plaguing U.S. service members.

Among the agencies that have helped fund her effort: The Financial Industry Regulatory Authority and the Foundation for Financial Planning. "I talked to a lot of financial counselors at military installations," Petraeus says. "I did two trips for the Navy. It's not unusual for service members to come in with $60,000 to $70,000 in credit card debt. They aren't aware of how much they owe. They pay the minimum on everything and finally go and ask for help."

Not only are young military personnel often naïve about money, but the sheer size of this group makes them a particularly vulnerable target. "The military paycheck is not very large. But they're absolutely guaranteed," she explains. "They will come in twice a month. The collective military payroll often is the largest in the state."

Petraeus describes one call from the mother of a young service member in Texas. He and a friend purchased laptops from a kiosk at a local mall. "The mother called because she got the paperwork," Petraeus says. "They were paying $140 a month." One critical question the two neglected to ask when obtaining the financing: "How long they'd be paying."

Petraeus says those computers, once the terms and interest rate were analyzed, wound up costing $3,300 apiece!

The financial problems of military personnel and their families became so severe that the Department of Defense worried they were affecting the ability of service members to do their jobs. During the first year of the Iraq conflict, soldiers had to be brought home because of financial problems, Petraeus recalls learning as the wife of a commander. Some incidents involved family members cleaning out the bank accounts of military personnel who were deployed.

The Department of Defense kicked off a "Financial Readiness" campaign in 2003 to attack the problem, and better educate military families about money. More than 20 nonprofits-including the Council of Better Business Bureaus-pitched in to provide free or no-cost assistance to military families. The campaign included making Military One Source, a military employee assistance program that confidentially provides counseling, accessible online at militaryonesource.com and toll-free at 1-800-342-9647. Plus, there are Department of Defense-paid personal financial counselors-including CFPs and ChFCs-offering free help to military personnel.

In Virginia, Petraeus was reuniting with her husband to attend an Association of the U.S. Army convention. The couple, who live in military lodging at MacDill Air Force Base in Tampa, Fla., recently took advantage of a double whammy of low home prices and low mortgage rates to purchase their own home. Although they were not living in it at this writing, the home is a symbol of stability in the lives of two heavily traveled military spouses, now parents of two grown children.

The 57-year-old Holly Petraeus doesn't field BBB telephone complaints. Those are handled by staff personnel. Her three-day-a-week job involves publishing a monthly newsletter and crafting 90-minute financial workshops, complete with handouts for bureaus to bring to military bases.

Her own home-buying experience prompted her to write an item on home buying in the BBB military newsletter, she says. Home buying may illustrate a prime example of how it's not merely crooks and lenders preying on military personnel. America's military heroes also have been getting the short end of the stick from state and federal governments.

The first-time home-buyer federal income tax credit, available through December 1, lets eligible home buyers immediately recoup as much as $8,000 toward the down payment on a home. However, under this rule, if you rent or sell the home within three years, you must repay that money-a provision that sidelines members of the military, who are constantly threatened with the prospect of deployment. "I haven't lived in a house for three years since the 1990s!" Petraeus says, noting she was unable to take advantage of the tax credit. She says, however, that Rep. Charles Rangel, D-N.Y., has been trying to change the law to consider this impact on service members.

Petraeus visits Better Business Bureaus nationally-at least 120. She inspires them to man booths at military base events. So far this year, she estimates, the BBB impacted 9,000 military personnel-either through classes or via booths set up at consumer fairs. Some 750,000 copies of a Kiplinger/BBB personal finance guide also were distributed free for military families. There is online military financial information, divided by branch of service, at bbb.org/military.

One major point her Military Line hopes to drive home: Military personnel, before making a purchase or sending money to any company, need to check the company out with the BBB online for complaints. Also important to monitor: a company's BBB letter rating score, which ranges from "A+" to "F." The score measures a combination of factors on companies, such as time in operation, licenses and government actions against it, complaints and any advertising issues. She also hopes service members will call on the BBB to mediate complaints. A steady 50,000 BBB complaints annually come from military personnel, she estimates.

"She's [Petraeus] been fantastic-a great friend to the Department of Defense!" says David Julian, director of the office of personal finance at the Office of the Secretary of Defense. "We've invited her to military conferences every year. We get all the managers of all financial services together. Last year, she was one of the keynote speakers. Mrs. Petraeus or [her assistant] will do anything in their power to make any event or conference we invite them to."

When it comes to military personnel getting ripped off, your thoughts may turn to payday loans. These short-term, high-cost loans were blamed for sending military personnel into so much debt that many lost their security clearances.

That problem is relatively under control, Petraeus says. Today, payday loans for military and family members, thanks to the National Defense Authorization Act of 2007, are capped at a 36% annual percentage rate. "It sounds high," she says, "but the usual [payday lender APR] is 391%. That's if you don't roll it over!"

Because of the new interest rate cap, payday lenders won't lend to the military anymore because they can't make a profit, she says. Of greater concern now, she adds, are predatory lending and the Internet, which she dubs "the second home" of military personnel. In fact, she says she's a frequent "telecommuter."

"In terms of financial rip-offs, it's [the Internet] like the Wild West, and there's almost no regulation," she says. 

Among the common Internet frauds are promises of loans, regardless of credit history, in exchange for up-front "advance" fees. Once money is wired, the recipient pockets the money-never to be found again. Fraudulent Internet sales of electronics and cars have been widespread. Crooks frequently operate outside the country, where U.S. regulators have no jurisdiction.

"They're Internet savvy, but not financially savvy," Petraeus says of many young military personnel. "They don't recognize some of the red flags out there." One advance-fee purveyor, she says, operated under 16 different names in 13 states!

Petraeus hopes to see bank fees both on credit cards and debit cards reined in. "There's a lot of money being made out there-far more than was being made by banks back when I was younger."

When Petraeus was younger, hidden fees on debit cards and credit cards were not the issue. Like many military spouses, she tried very hard not to bring her husband any issues she could solve herself. Nevertheless, among their financial blunders: The couple signed a contract for an apartment-sight unseen at the first place they were assigned.

Not only was it totally different from a photo in the brochure, but "it was not very nice, and it was in a neighborhood that had a lot of police reports every weekend." The couple made the mistake of buying furniture from a rent-to-own company. It was more expensive than buying, and if you missed a payment, the company took back the furniture, and all the money previously paid was pocketed, she says.

Then there was a realty partnership investment that never did obtain approval from the Securities and Exchange Commission. "At least we did get out the money we put into it, but we didn't make anything on it." The couple, she acknowledges, failed to do proper due diligence.

Petraeus, an English and French major and summa cum laude graduate of Dickinson College in Carlisle, Pa., has been married to Gen. Petraeus for 35 years. She met her husband-a cadet at West Point-on a blind date. Both were in their senior years. She won't discuss the circumstances of the meeting. But coincidentally, her late four-star general father at the time was superintendent of West Point-from which Gen. Petraeus graduated near the top of his class.

Now, she says, Gen. Petraeus spends one-quarter of his time at home. "I certainly see him far more than when I saw him when he spent four years living in Iraq. Like most people, e-mail is a big part of his day."

Holly Petraeus did volunteer work at army posts in several areas, and also worked as a civilian on military bases, sometimes in administrative roles. She began turning to financial issues in a big way around 2003 while her husband was constantly away commanding the 101st Airborne Division in Iraq.

At Fort Campbell, Ky., she hooked up with the CEO of the nearby Tennessee Better Business Bureau and began an educational campaign, which grew into the national BBB Military Line. She also talked to congressional reps, served on state boards and testified at public hearings.
A major cause in 2003: The unfair practice of stripping financial benefits from low-income military families due to the deployment of one family member. Often, there was no change in family financial situation when this occurred-just one less family member at home.

Does this shameful practice continue? Petraeus says that because benefits are provided by so many different state and federal agencies, it's impossible to know.

Another major issue she brought to the attention of "a congressional member": Military ID cards have a Social Security number smack-dab on them-despite the fact that military personnel are prime targets of identity theft. This is changing, she says, as cards get reissued.
Too often, military personnel, busy in combat, assume that because their combat pay is not subject to federal income taxes, they needn't bother filing. By not filing, many overlook the complex "earned income" tax credit, which still could mean a substantial tax refund for their families. Petraeus stresses that military bases provide military personnel with free tax help, which, if they take advantage of it, should curb this oversight.

Petraeus' BBB program has offered classes on teen budgeting and teen car buying, as well as adult savings and budgeting and adult car buying. She's currently working on a FINRA-sponsored retirement class.

With the retirement class, she not only hopes to educate military personnel about traditional IRAs and Roth IRAs, but also to address a chief concern: the false sense of security military personnel may have because the military provides a defined benefit program. Under that program, it takes 20 years of service to collect benefits. And those benefits are merely one-half of the service member's base salary. After 30 years, she says, military personnel get 75% of their base salary. Meanwhile, upon retirement, service members lose extra allowances, such as housing, that they received while working. Often, they are surprised when their lower post-retirement income hampers their ability to get a mortgage.

One of Petraeus' missions will be to encourage military personnel to take advantage of the Thrift Savings Plan, the federal government's version of a 401(k). A Roth-style option, at this writing, was being added to the program. A February-released survey by the FINRA Investor Education Foundation indicated that 22% of U.S. service members are unaware of the Thrift Savings Plan, which only became available to military personnel around the turn of this century.

Combat personnel needn't worry about paying ordinary income tax on retirement distributions in the Thrift Savings Plan. Reason: Most combat pay is already tax-free. So only the service members' earnings under the plan would be taxable. Nevertheless, even with this attractive perk for combat personnel, military personnel are getting shafted. That's because the federal government provides matching contributions under the Thrift Savings Plan to civilian employees, Julian confirms, but not to military personnel.