BACK

Credit Smart

How military couples can get interest rate relief

Summary

If credit card accounts are held jointly by military spouses, then they qualify for interest rate relief under the Servicemembers Civil Relief Act

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Question for the CreditCards.com expert

Dear Credit Guy,
I was reading your article about notifying credit card companies for active duty to lower interest rates to 6 percent. My husband (he’s deploying soon) plans on doing this with his credit cards. We were planning on adding each other to our cards also. If I add him to mine, would the act cover those cards even though the credit was originally issued to me, a civilian? Since we both are married, and I have power of attorney, wouldn’t the card be his, too, once his name is added? Thank you for any response. — Jennifer

Answer for the CreditCards.com expert

Dear Jennifer,
You are referring to the Servicemembers Civil Relief Act of 2003 (SCRA), which provides that the maximum rate of interest charged on debts incurred before military service must be 6 percent and any interest in excess of 6 percent be forgiven. Under this provision of the act, accounts of the service member or joint accounts of the service member and the service member’s spouse are eligible.

To qualify for the interest rate of 6 percent, you must submit in writing to the issuing financial institution notice that you qualify for the reduction and a copy of the military orders calling the service member to military service. I would mail it certified mail, return receipt requested. Once the creditor receives your paperwork, the account will accrue interest at the 6 percent rate from the date of military service. You will also need to send paperwork again once your husband is no longer serving. You have until 180 days after his release to let them know.

I understand your reasoning for wanting your credit cards to be included under the protections of the SCRA. However, just adding your husband’s name to your credit card account as an authorized user still leaves the account only in your name. As such, it would not be eligible for protection under the SCRA because the account is not a joint account with your husband.

You could request that your husband be added as a joint cardholder, but most card issuers will require that your husband fill out an application, which would result in the issuer reviewing his credit report to decide whether to add him as a financially responsible party on your account.

If time allows, you might consider transferring the balances from your credit card accounts to your husband’s accounts. Or apply for a new joint credit card and transfer the balances from your cards to the new jointly held card. Also, the interest rate reduction is for obligations and liabilities incurred before military service. The interest rate reduction will not apply to any new debt acquired after military service has begun.

One other thing to keep in mind: The SCRA provides for creditor protections. A court can give the creditor relief from the interest rate reduction provision if the creditor can prove that the service member’s ability to pay interest in excess of 6 percent is not affected by the service member’s military service.

Take care of your credit!

See related:Active military personnel protected from interest rate hikes, Stepping up for America’s military men and women, best military credit cards

 

 

What’s up next?

In Credit Smart

Miss the opt out, you pay the price

If you missed your credit card issuer’s notice of an interest rate hike and didn’t opt out in time, you’re left with three choices.

Published: March 29, 2010

See more stories
Credit Card Rate Report Updated: August 21st, 2019
Business
15.55%
Airline
17.49%
Cash Back
17.63%
Reward
17.49%
Student
17.69%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.