The Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act (SCRA) is a federal law that provides financial relief to servicemembers and their dependents. The SCRA caps interest rates on pre-service debt at 6%, prohibits foreclosures and repossessions, and allows for the suspension of debt payments during active duty.
One of the benefits of the SCRA is that it allows servicemembers to lower their credit card interest rates to 6%. This can save servicemembers a significant amount of money on their credit card debt. To take advantage of this benefit, servicemembers must notify their credit card issuer in writing that they are on active duty. The credit card issuer must then reduce the interest rate on the servicemember's account to 6%.
Servicemembers can also take advantage of the SCRA to get a refund of any interest they have paid on their credit cards that is above 6%. To do this, servicemembers must submit a written request to their credit card issuer. The credit card issuer must then refund the servicemember any interest that they have paid above 6%.
The SCRA is a valuable resource for servicemembers and their dependents. It can help to protect their financial security and save them money on their debt. Servicemembers who are on active duty or who are about to deploy should contact their credit card issuer to learn more about how they can take advantage of the SCRA's credit card benefits.
Here are some additional things to keep in mind about the SCRA's credit card benefits:
The SCRA benefits apply to all credit cards, including personal credit cards, business credit cards, and credit cards issued by credit unions.
The SCRA benefits apply to both active duty servicemembers and reservists who are called to active duty.
The SCRA benefits apply to both the servicemember and their dependents.
The SCRA benefits last for the duration of the servicemember's active duty, plus an additional 180 days.
What Is the Military Lending Act (MLA)?
The MLA, enacted in 2006 and subsequently expanded in 2015, is a federal law that places specific limitations on certain types of consumer loans and credit protections for active-duty servicemembers and their dependents. Its primary aim is to prevent predatory lending practices that could lead to financial distress within the military community.
Key Provisions of the MLA
Interest Rate Cap: One of the most notable provisions of the MLA is the cap it places on the Annual Percentage Rate (APR) for covered loans. Currently set at 36%, this cap includes not just interest but also various fees and charges associated with the loan.
No Mandatory Arbitration: The MLA prohibits creditors from requiring servicemembers to submit to mandatory arbitration. This ensures that servicemembers maintain the right to take legal action if they believe their rights under the MLA have been violated.
Clear Disclosures: Lenders must provide clear and accurate disclosures about the terms of the loan, including the APR, payment obligations, and the total cost of the loan. This empowers borrowers to make informed decisions.
No Rolling Over Loans: Creditors cannot roll over, renew, refinance, or consolidate loans covered by the MLA without borrower consent.
Why the MLA Matters
Protecting Financial Security
The MLA serves as a critical shield against unscrupulous lenders who might target servicemembers with high-cost loans, ensuring that military families can maintain their financial security while serving their country.
Empowering Financial Decision-Making
By requiring clear disclosures and limiting interest rates, the MLA empowers servicemembers to make sound financial choices. This knowledge is invaluable, both during active service and in the transition to civilian life.
SCRA Credit Cards
The MLA has been amended a few times since its enacted in 2006 in an attempt to prevent credit agencies from changing and hiding fees. This expansion prompted some credit card companies to go beyond the requirements within the law, perhaps to steer clear of breaking the law, and begin waiving many fees for Active-Duty military and their spouses. One of those fees is the annual fee by companies such as American Express, Chase, and Citi Bank. That means military families can take advantage of the amazing perks of credit cards that would typically charge an annual fee up to $695, for free!
Here are some of the best credit card options that allow military members to have annual fees waived that provide some great benefits:
USAA Cashback Rewards Plus American Express Card - This card offers 5% cash back
Chase Sapphire Reserve® - This card offers a welcome bonus of 60,000 points after you spend $4,000 on purchases in the first 3 months from account opening. It earns 3 points per dollar on travel and dining, and 1 point per dollar on all other purchases. It has a $550 annual fee, but it comes with a number of travel benefits, such as airport lounge access and travel credits. creditcards.chase.com Chase Sapphire Reserve®
American Express Platinum Card - This card offers a welcome bonus of 100,000 points after you spend $6,000 on purchases in the first 6 months from account opening. It earns 5 points per dollar on flights booked directly with airlines or through Amex Travel, and 1 point per dollar on all other purchases. It has a $695 annual fee, but it comes with a number of travel benefits, such as airport lounge access and statement credits.
Citi® Double Cash Card - This card earns 2% cash back on all purchases, which is a great option for those who don't want to have to worry about rotating categories. It has no annual fee and no foreign transaction fees. www.citi.com Citi® Double Cash Card
