On active military duty? You can't get 6 percent APR cap on cards

Service members' legal protections apply to older debt


Dear Credit Smart,
I am on active duty and have been for the past seven years. When it comes to the SCRA, can I still get my interest rates on all my credit cards dropped to a 6 percent if I received my credit cards after I joined the military? – Tammie


Dear Tammie,
First of all, thank you for your service. Second, I wish I had better news for you, but it does not look like you qualify for interest rate relief under the law.

The U.S. government has for many decades enacted and enforced laws that give service members protection from high-cost credit. It began with the Soldiers’ and Sailors’ Civil Relief Act of 1940. That law was updated by the Servicemembers Civil Relief Act (SCRA) of 2003. The Military Lending Act took effect in October 2016 and added further protections from predatory lenders for service members.

You are asking about one of those protections: The SCRA sets a firm 6 percent cap on credit card interest rates on debts accrued before military service.

6 percent cap applies only to debt before active duty
The law is clear regarding the 6 percent cap on credit card interest rates. That law applies only to debt incurred before a person goes on active duty. You say you received your credit cards after you went on active duty, so unfortunately the law does not apply in your case.

For those who do qualify, it’s important to note that this benefit is not automatic.

  • Requests to receive the benefit must be made in writing.
  • Any interest charged above that 6 percent cap must be permanently forgiven.
  • Monthly payments must also be reduced by the difference in the interest charges.
  • Once active duty is over, the credit card companies cannot go back and charge the service member for the forgiven interest.

Tammie, I am sorry you do not qualify for credit card debt relief from the SCRA. However, there are other avenues you can explore if your credit card debt is becoming too much for you to handle on your own.  

  • Explore the financial advice you have available on your base. In recent years, the military has expanded its financial readiness programs.
  • The Consumer Financial Protection Bureau has a division dedicated to assisting service members. It has a wealth of information.
  • A nonprofit credit counseling agency, like those associated with the National Foundation for Credit Counseling, will work with you to find the best solution for you. Counseling can be done over the phone or even via the internet in many cases. Because many NFCC agencies have veterans’ programs, a special link was set up for active duty members of the military and veterans. There could be other resources available you may not know about, which your counselor can help you navigate.

Remember to always use your credit smarts!

See related: Understanding the Servicemembers Civil Relief Act, Military Lending Act gives soldiers thicker armor against predatory lenders

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Updated: 02-19-2019