Credit cards for military personnel provide specific benefits and rewards for over a million active-duty members of the armed forces in the country. These various perks are not reserved solely for active-duty military members; family members can also take advantage of these military credit card benefits, which include additional perks such as access to credit union rewards cards not available to the general public.
Interest Rate and Fee Benefits Under the SCRA
This law is a federal statute that limits interest rates for active-duty military members and their families. The protection extends to all credit cards and even debts incurred before active service.
Active military service members can benefit from a significant reduction in high-interest debts. The law caps interest rates on debts incurred before active service at 6%, regardless of the current interest rate.
Credit card companies may even waive other fees such as annual fees and late fees. For example, Discover does not charge late fees to military members.
The interest rate reduction is particularly beneficial if you’re struggling to pay off your credit card balance at a high interest rate. For instance, paying off a $5,000 credit card balance at an annual interest rate of 17% with monthly payments of $200 will cost you $1,216.15 in interest. It will take 32 months to pay off the balance.
Reducing the interest rate to 5% on the same $5,000 credit card balance with monthly payments of $200 will reduce the total interest paid to just $291.14, and shorten the repayment period to 27 months.
Note: In addition to protection from high interest rates, the SCRA also protects against actions affecting credit such as eviction and repossession.
Eligible Members for SCRA Benefits
The SCRA covers most members of the Army, Navy, Air Force, Marines, Coast Guard, reservists, and any National Guard member called to federal orders for more than 30 consecutive days, as well as active-duty officers in the Public Health Service or the National Oceanic and Atmospheric Administration.
For most Army members, your protection under the SCRA begins on the day you enter the military. These benefits apply to auto loans, mortgages, installment loans, and even some student loans.
Unfortunately, the benefits are not automatic. For example, to receive the active-duty military interest cap of 6%, you will need to take some extra steps by sending a written notice to your creditors along with a copy of your active orders.
Note: You are still eligible for interest rate reduction benefits even if you do not notify your credit card issuer immediately. You can apply at any time while you are on active duty and up to 180 days after being discharged from active duty.
The interest rate reduction applies throughout your active duty service, and in some cases, your credit card issuer may be required to refund any interest charged above 6%.
Interest Rate and Fee Benefits Under the MLA
While the SCRA provides protections for debts incurred before active service, the MLA limits interest rates on new loans taken out after your service begins.
Under the MLA, limits are set on interest rates for most types of consumer loans at 36%, including finance charges and many other fees.
Furthermore, the law prohibits creditors from:
requiring you to submit to mandatory arbitration
demanding automatic withdrawals from your paycheck for a loan
imposing upfront penalty fees if you pay all or part of the loan early
Credit Card Fraud Protection for Active Duty Military
Sometimes, active duty service members may want to protect themselves from unauthorized credit card use and identity theft while they are on duty.
To prevent
You can place an active fraud alert on your credit report for up to one year. The fraud alert will prevent credit cards from being opened in your name while you are away on service abroad.
Rewards Cards for Retired Military and Spouses
Some benefits of military credit cards are not limited to active-duty military members. You may qualify for certain military-related credit cards if you: are no longer on active duty, are a retired service member, or are the spouse or immediate family member of a military service member.
These credit cards are offered by military-affiliated credit unions such as USAA, PenFed, and Navy Federal Credit Union.
A good example of two military-related cards are the Navy Federal More Rewards American Express card and the USAA Cashback Rewards Plus American Express card. Both cards provide cash rewards for everyday spending.
The Navy Federal card offers 3 points for every dollar you spend at supermarkets, gas stations, transit expenses, and restaurants, plus one point for every dollar spent on anything else.
The USAA card gives you 5% cash back on the first $3,000 you spend on military bases and fuel, 2% on the first $3,000 you spend on groceries per year, and 1% on all other purchases.
Note: You are usually eligible for a military credit card as long as you are a member of the credit union issuing the card. Membership is typically available to active-duty military members, retirees, their spouses, and family members, and in some cases, close relatives.
Joining one of these credit unions is relatively easy. In most cases, you can sign up online. Be sure to also check the eligibility requirements and membership of the credit union. If you are a spouse or relative, you may need to provide certain information about the military member who served.
Conclusion
The benefits of military credit cards are designed to help active-duty service members, retirees, and their families save money on credit card interest rates and more. The SCRA law provides not only protections for debts incurred before active duty but also caps the interest rate on most consumer loans. If you believe you qualify for these military credit card benefits, contact your credit card company or bank or credit union to start saving.
Source: https://www.thebalancemoney.com/military-credit-card-benefits-and-rewards-4797124
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