Here’s How Active Military Can Snag Special Credit Card Benefits - NerdWallet (2024)


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.

Here’s How Active Military Can Snag Special Credit Card Benefits - NerdWallet (2024)


Here’s How Active Military Can Snag Special Credit Card Benefits - NerdWallet? ›

Lower credit card interest rates

What is the military credit card called? ›

Administered by the Army and Air Force Exchange Service, the Military STAR® credit card provides fair and flexible terms to help service members and their families safely and affordably build credit. The card is accepted at all military exchanges and commissaries.

Does the military Lending Act apply to credit cards? ›

For example, if a creditor extends credit to a covered borrower through a credit card account and the borrower incurs a finance charge relating to a specific transaction, such as a cash advance transaction, during the billing cycle, then the creditor would calculate the MAPR under the instructions set forth in 12 CFR ...

Does Chase waive annual fees for the military? ›

Chase will waive annual fees on personal consumer credit cards for eligible active-duty military members and their spouses but does not waive annual fees for business credit cards. Fortunately, there are Chase business credit cards that have no annual fee or a lower annual fee.

What are SCRA benefits on credit cards? ›

The SCRA requires that lenders cap interest rates on pre-service debt at 6%, among other protections. But several major issuers offer even lower interest rates, sometimes extending them for up to a year after the active duty period has ended. Some issuers also waive various credit card fees, and a few issuers do both.

What is the military credit card relief? ›

If you took out an automobile, home, or student loan or incurred credit card debt prior to becoming a servicemember (also known as a “pre-service obligation”), or if you took out such a loan jointly with your spouse, then you are entitled to have your interest rate reduced to a maximum of 6 percent per year.

Who is eligible for a military star card? ›

The MILITARY STAR card and its benefits are exclusively available to military personnel and their families, DoD Civilians, Purple Heart recipients and Disabled Veterans and Veterans who received an Honorable or general under Honorable conditions discharge have online shopping privileges.

Can you borrow money from the military? ›

Armed Forces Bank specializes in personal loans for military members, active duty and retired, or current Armed Forces Bank customers. Apply online in minutes. See instant approval status. Receive and accept personal loan offer.

What is the Patriot Act for credit cards? ›

Section 326 of the USA PATRIOT ACT requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account or changes an existing account. This federal requirement applies to all new customers and current customers.

What is the maximum APR for military? ›

The interest rate includes interest and other charges or fees applied to the loan. During periods of qualifying active duty military service, the interest rate on the eligible loan will not exceed 6%. If the interest rate is already below 6%, the loan will retain the lower interest rate.

What is a 5 24 rule? ›

What is the 5/24 rule? Many card issuers have criteria for who can qualify for new accounts, but Chase is perhaps the most strict. Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.

Is Chase free for military? ›

Get all of the perks of Chase Premier Plus Checking℠ and we'll waive the $25 Monthly Service Fee for current servicemembers and veterans of the U.S. Armed Forces with a qualifying military ID. No Chase fee on the first four non-Chase ATM transactions each statement period.

Is Chase good for the military? ›

The Chase Sapphire Reserve® is a highly coveted travel credit card that offers a host of exclusive benefits and rewards. Recognizing the sacrifices and service of military personnel, Chase provides a military fee waiver for Sapphire Reserve card holders and extends its benefits to active-duty military spouses.

Who is not eligible for SCRA benefits? ›

Persons Not Entitled to Benefits

Reservists or National Guard personnel not in an active-duty status are not covered under the SCRA. Also, the statute does not protect retired personnel. Servicemembers who may fall under the SCRA's protections, may lose those shields due to the servicemember's own misconduct.

Do I get money back with SCRA? ›

Servicemembers Get Money Back

Additionally, the SCRA requires that any request for a lower interest rate be followed by some form of refund. So all the extra money that the servicemember paid as his or her interest rate that grew over the years? It must be given back upon the request for a backdated interest rate.

Does Capital One do SCRA benefits? ›

WHAT TO EXPECT NEXT. When will I know if I'm eligible for SCRA benefits under Capital One's SCRA Program? If you are eligible, we will apply benefits to each of your eligible accounts within 2 monthly billing cycles.

What is a military card called? ›

Overview Common Access Card. Common Access Card (CAC) The CAC, a "smart" card about the size of a credit card, is the standard identification for active duty uniformed Service personnel, Selected Reserve, DoD civilian employees, and eligible contractor personnel.

What is a CAC credit card? ›

The customer acquisition cost (CAC) for a credit card customer can vary depending on various factors, such as the marketing strategies employed, target audience, industry, and specific credit card offerings.

Who accepts the military star card? ›

Where the Military STAR Card can be used:
  • Army and Air Force Exchange Service (AAFES)
  • Marine Corps Exchange (MCX)
  • Navy Exchange (NEX)
  • Coast Guard Exchange (CGX)
  • Base Exchange (BX)
  • Post Exchange (PX)
  • Commissaries.
  • Uniform shops.

Is Amex free for the military? ›

Therefore, The Platinum Card® from American Express has no annual fee for military members. This is true regardless of when the card was opened. Since American Express usually charges a hefty $695 annual fee, this can represent a huge savings.

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