Imagine checking your mailbox and finding a check from your credit card company. How cool would that be? Pretty cool. And it could be you!
There’s a lot of conversation, and confusion, about the Servicemember’s Civil Relief Act (SCRA) and how it applies to interest on credit cards. In large part, the confusion is because many companies will give military members benefits that extend far beyond what the SCRA requires. Those companies might even use the term “SCRA” when they are actually talking about their military benefits and policies. But who cares what they call it? If you have a credit card, you should see if they offer benefits to military families. A list of companies that definitely offer benefits is available at the bottom of this article.
Note: With any benefit that private companies offer, there are always some people who feel the need to be a jerk about it. Please, please do not be like the spouse abusing the cashier at a smoothie shop because their store’s military discount does not extend to spouses, or the veterans who can’t understand why the Home Depot’s military discount policy is designed for those with a military ID. If you are able to benefit from these policies, great. If they say no, for whatever reason, please be nice about it. Don’t ruin it for everyone.
What The SCRA Says About Credit Cards?
Here’s what the actual law says:
§527. Maximum rate of interest on debts incurred before military service
(a) Interest rate limitation
(1) Limitation to 6 percent
An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember’s spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent—
(A) during the period of military service and one year thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage; or
(B) during the period of military service, in the case of any other obligation or liability.
(2) Forgiveness of interest in excess of 6 percent
Interest at a rate in excess of 6 percent per year that would otherwise be incurred but for the prohibition in paragraph (1) is forgiven.
(3) Prevention of acceleration of principal
The amount of any periodic payment due from a servicemember under the terms of the instrument that created an obligation or liability covered by this section shall be reduced by the amount of the interest forgiven under paragraph (2) that is allocable to the period for which such payment is made.
(b) Implementation of limitation
(1) Written notice to creditor
In order for an obligation or liability of a servicemember to be subject to the interest rate limitation in subsection (a), the servicemember shall provide to the creditor written notice and a copy of the military orders calling the servicemember to military service and any orders further extending military service, not later than 180 days after the date of the servicemember’s termination or release from military service.
(2) Limitation effective as of date of order to active duty
Upon receipt of written notice and a copy of orders calling a servicemember to military service, the creditor shall treat the debt in accordance with subsection (a), effective as of the date on which the servicemember is called to military service.
(c) Creditor protection
A court may grant a creditor relief from the limitations of this section if, in the opinion of the court, the ability of the servicemember to pay interest upon the obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of the servicemember’s military service.
As you can see, it’s pretty limited. Debts that were incurred prior to military service must have their interest rate reduced to 6%, from the date of entering the military, to one year after leaving the military. It applies to debts held by the service member, or jointly held by the service member and his or her spouse.
If you have debt from before joining the military, be sure to let every single creditor know, in writing, that you’re now on active duty.
But These Companies Offer More!
There are many companies who offer even better benefits. Many, many military members are receiving lower interest rates and even refunds of interest previously paid, just by asking. Please note this is not required by law – they are honestly just being nice. Tip: Even though these are not technically SCRA benefits, you might want to use the term SCRA when talking to the companies. Hey, if that’s the lingo they want to use to give you money, go with it.
Here are some companies that readers have reported receiving lower interest rates and/or refunds beyond the requirements of the SCRA.
USAA will reduce your interest rate to 4% for 12 months in conjunction with a deployment or PCS move. They will also reduce the interest rate on pre-service debt to 4%, and they’ll refund all interest earned during a deployment during which you received either the Global War on Terrorism Expeditionary Medal or the Afghanistan Campaign Medal.
Start the process of applying for any of these benefits at the USAA website.
American Express will waive annual fees for active duty military, even for their most expensive cards. They’ll also waive some of their other fees, such as over-limit fees, late payment fees, returned payment fees (though we shouldn’t be getting any of those) and statement copy request fees.
Full instructions for applying for any of these benefits can be found at the American Express website.
Capital One offers to lower interest rates to 4%. If the service member is the cardholder, apply online at https://www.capitalone.com/about/military/scra/. If the account is held by a spouse, or is closed, send the following information by regular mail or fax to 1-866-516-4023:
Credit Card Number
Include a copy of most recent orders.
The mailing address is:
Attn: SCRA Request
P.O. Box 30285
Salt Lake City, UT 84130-0285
Synchrony Bank, formerly GE Capital Retail Finance Corporation, issues credit cards for over 200 different retailers, including Banana Republic, Care Credit, GAP, JCPenney, Lowes, Mattress Firm, Old Navy, Paypal Credit, Sams Club, TJX, and Walmart. Reports are that they are extremely responsive to requests for benefits for military members.
Call them at 1-800-232-6954, or try this email address: firstname.lastname@example.org.
Chase Bank offers to lower interest rates to 4%. Find out more at the Chase Military Customer Services webpage.
Discover offers 6% interest rate to the military member and spouse. Log into your Discover account to request SCRA benefits.
Barclay will lower interest rate to 0% and give you a refund of interest previously paid. Call them at 1-866-918-5212. You will probably have to ask for the SCRA department.
The upshot of all this information is to say that it never hurts to ask. If you have credit cards, call them and see what they can offer you. Some may lower your interest rate, some may waive fees, and some may even send you a check! The whole thing is so crazy to me because in most cases, these benefits extend way beyond what the law requires. Might as well take advantage of this perk of military service!
Repeating the note from above because it is so important: If you think you may have accounts with companies that offer benefits beyond those required by the law, be nice when you ask. Be even nicer if the answer is no. These companies do not have to give extended benefits, and they can stop at any time. And they just might, if the people asking for benefits don’t behave properly.
I’ve discovered that my friend Curtez wrote about this last year. You may find more information in his article: 13 Credit Card Companies That Provide Cash Refunds Under SCRA.
Do you want to know more about your military pay and benefits?
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