Special Credit Card Benefits Available for Active Military Personnel

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 (SCRA), legislation that grants a low cap on credit card interest rates during active duty. However, a recent study found that many service members are not taking advantage of this benefit, resulting in unnecessary financial strain.

The 2022 study from the Consumer Financial Protection Bureau revealed that members of the National Guard and Reserves are not benefiting from the rate reduction benefit for credit cards as often as they could. The study suggests that lack of awareness about the SCRA and the requirement for service members to apply for the benefits are contributing factors to the underutilization of this important financial protection.

To address this issue, a bill was proposed in early 2024 to increase awareness and streamline the application process for SCRA benefits. The Improving SCRA Benefit Utilization Act aims to make it easier for service members to access the savings they are entitled to under the SCRA.

Under the SCRA, interest rates on loans taken out before the date of service cannot exceed 6% for the duration of active duty service. This is a significant benefit considering that credit card interest rates today are often much higher. The SCRA also prevents lenders from retroactively adding interest charges above 6% onto the loan once active duty ends.

Service members eligible for the interest rate reduction benefit include active-duty members of the Air Force, Army, Coast Guard, Marine Corps, and Navy, as well as Reserve members on active duty, National Guard members mobilized under federal orders for more than 30 consecutive days, and active-duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration.

In addition to the SCRA, the Military Lending Act (MLA) provides further protections for service members and their dependents. The MLA caps the military annual percentage rate (MAPR) of interest at 36% and requires issuers to factor in credit card fees when calculating the MAPR.

Some credit card issuers go above and beyond these protections by offering additional benefits to active service members. These perks can include waived annual fees, waivers on other fees like late fees and balance transfer fees, and interest rates below the 6% cap mandated by the SCRA.

While service members eligible for MLA protections automatically receive those benefits, they must apply for SCRA protections directly with the lender and submit documentation verifying their active-duty period. The onus is on the service member to take action to access these benefits, but the personal finance management office on base can provide assistance and education to those seeking to apply for SCRA benefits.

Overall, understanding the SCRA, MLA, and the policies of credit card issuers can help active military service members access the savings they are entitled to and alleviate financial burdens during their service. By taking advantage of these benefits, service members can ensure they are not paying more interest on loans than necessary and can focus on their important work of protecting the nation.