Military service members protect the nation, and, in turn, some aspects of their finances are protected by law. In 2003, Congress passed the Servicemembers Civil Relief Act, legislation that grants a low cap on credit card interest rates during active duty. But more than 20 years later, this benefit is underused, causing many service members to pay much more interest on loans than they have to.

A 2022 study from the Consumer Financial Protection Bureau found that members of the National Guard and Reserves “infrequently benefit from the rate reduction benefit for credit cards.” The study’s authors hypothesize that underutilization is due to lack of awareness about the SCRA and the responsibility placed on the service member to apply for the benefits.

In early 2024, a bill was proposed to increase awareness and streamline the application process. In doing so, the Improving SCRA Benefit Utilization Act aims to increase the number of service members who receive SCRA benefits.

If you’re an active military service member, you could be leaving hundreds of dollars on the table in the form of savings on interest and other credit card-related fees. Understanding the inner workings of the SCRA, its sister law the Military Lending Act and the policies of credit card issuers can help you access those savings you’re legally entitled to.

Lower credit card interest rates

Under the SCRA, interest rates on loans taken out before the date of service cannot exceed 6% for the duration of active duty service. Given that credit card interest rates today are often 20% or higher, this benefit can have a meaningful impact on service members carrying large credit card balances. The SCRA also prohibits lenders from retroactively adding interest charges above 6% onto the loan when active duty ends.

The following service members are eligible for the interest rate reduction benefit:

  • Active-duty members of the Air Force, Army, Coast Guard, Marine Corps and Navy.

  • Reserve members on active duty.

  • National Guard members mobilized under federal orders for more than 30 consecutive days.

  • Active-duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration.

“For debt acquired while on active duty, that’s where the Military Lending Act comes into play,” says Vanessa Alanis, a certified financial planner in Manassas, Virginia. The MLA says that issuers cannot charge a military annual percentage rate (MAPR) of interest above 36%. The MLA requires issuers to factor in credit card fees such as annual fees when calculating the MAPR.

The MLA protects the following service members and their dependents:

  • Regular or reserve member of the Air Force, Army, Coast Guard, Marine Corps, Navy and Space Force serving on active duty under a call or order that does not specify a period of 30 days or less.

  • A member on Active Guard and Reserve duty.

Other credit card benefits

Some issuers offer credit card perks to active service members that go above and beyond protections afforded by the SCRA and MLA, Alanis says.

Waived annual fees

Some credit card issuers, including Bank of America, Capital One, Chase and American Express, waive any annual fees associated with credit cards. Depending on the credit card, this benefit may result in substantial savings. Some of the most premium cards on the market today charge annual fees of almost $700, but they also offer coveted perks such as travel credits, airport lounge access, free companion tickets for flights and statement credits for TSA PreCheck or Global Entry.

Waivers on other fees

Many of the same issuers that waive annual fees also show leniency toward other credit card fees. Capital One, Chase and U.S. Bank, for example, explicitly say that they waive all credit card fees, which can include late fees, balance transfer fees, returned payment fees and cash advance fees.

Interest rates below 6%

The SCRA mandates that interest rates on credit cards opened before service began cannot exceed 6%, but some issuers charge even less. Navy Federal Credit Union, USAA, Capital One and Chase cap interest rates on credit cards for active-duty service members at 4%. And Barclays reduces the annual percentage rate all the way to 0% for credit cards that were opened before active duty began.

How to access credit card benefits

Service members eligible for protections under the MLA automatically receive those benefits with no action required on their part. However, the onus is on the service member to receive SCRA protections. They must apply for benefits directly with the lender and submit documentation that verifies the active-duty period. A separate interest reduction request must be submitted for each account, even if they’re held by the same lender.

Lenders are required to accept applications for reduced interest rates throughout active duty and up to 180 days after duty ends. However, service members who submit applications after the beginning of active duty will receive a refund of all interest that was charged over the 6% cap since the beginning of the active duty period. “It is never too late while serving in the military to contact your credit card company about this benefit,” Alanis says.

Alanis reminds service members that the personal finance management office on base can provide further education and assistance to those trying to apply for SCRA benefits.

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