Save Money with the Servicemembers Civil Relief Act (SCRA)

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Last updated on April 2nd, 2024

Serving your country is one of the bravest – and most selfless – things you can do for your nation. Because our active-duty military personnel risk so much to protect our freedoms, they are provided with financial benefits to make their deployment a little less stressful for themselves and their family. The SCRA and MLA provide relief for credit card interest and fees, but how do they work?

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What are the SCRA and the MLA?

Active, on-duty military personnel are protected from excessive fees and charges through the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA). SCRA is a program that provides certain protections in lending for servicemembers on Active Duty. The MLA, on the other hand, protects active-duty members of the military, their spouses, and their dependents from certain lending practices, including loan rollovers and refinancing.

Servicemembers Civil Relief Act

The SCRA is a federal law that restricts or limits actions against military personnel serving on active duty. Congress enacted the law in 2003 (formerly known as the Soldiers’ and Sailors’ Civil Relief Act), to ease active-duty service members’ financial burdens. The SCRA applies to active active-duty service personnel, active reservists, and active National Guard members — especially those who are deployed.

Eligibility for SCRA benefits begins on the date an eligible active-duty servicemember receive active-duty orders. SCRA coverage lasts until 30 to 90 days after the date of discharge from active duty.

How to Claim SCRA Benefits

To receive benefits under the SCRA, eligible servicemembers must request relief on paper and verify their active-duty military status. A letter containing the following information is typically enough to qualify for SCRA relief:

  • Account number
  • Start date of active-duty service
  • An SCRA request for a reduction in interest rate
  • A copy of active-duty orders.

The total time for SCRA relief varies by lender and credit card issuer. Some banks may request relevant information immediately, while other lenders may provide a window of up to 180 days for supplying relevant information.

Military Lending Act

The MLA applies to active-duty service members (including those on active Guard or active Reserve duty), spouses, and certain dependents. It limits the interest rates that may be charged on many types of consumer loans to no more than 36% and provides other key protections.

The MLA limit on interest rates is also known as MAPR (Military Annual Percentage Rate). The MAPR covers additional fees and charges, such as:

  • Insurance premiums and fees
  • Debt cancellation contract fees
  • Debt suspensions fees
  • Other ancillary product fees

What Benefits do the SCRA and MLA Provide to Credit Cardholders?

Almost all banks and credit card issuers adhere to SCRA and MLA guidelines as required by law. Major lenders, like American Express, Chase, and Citibank are particularly favored amongst military families, thanks to the waiving of annual fees, other fees, and APR reductions on some of the most popular cards from these banks. Here are some of the best benefits of the SCRA and MLA for active-duty service personnel:

No Interest

One of the best features of credit cards for active-duty military personnel is the chance to reduce your credit card interest rate significantly. The SCRA places a cap on the rate of interest or fees your bank can charge active military personnel and their immediate families.

The SCRA caps charges at 6%, which applies to interest and other fees. This protection applies to the following financial loans and products:

  • Student loans
  • Credit cards
  • Car loans
  • Mortgage loans
  • Medical bills
  • Installment loans
  • Title loans

Citi, for instance, offers 0% APR on its credit cards for eligible active-duty military members. This feature means that you’ll pay no interest on any balances accrued before your deployment if you are active-duty military. Remember that SCRA interest and fee relief only applies to debt incurred before active duty begins.

The benefits of a low interest rate on your credit cards are apparent. After all, who wants to pay interest on purchases, especially if you are about to get deployed overseas. A low APR – and especially one capped as low as 6% can help family members pay down credit card debt while you are away, without the fear of significant interest accruing.

No Fees

As mentioned, the 6% cap on interest through the SCRA also applies to fees. This benefit is very straightforward and provides exceptional value for servicemembers and their eligible family.

Because Citi adheres to (and often goes above and beyond) SCRA and MLA guidelines, eligible active-duty military personnel can enjoy no fees of any kind in various key transactions – including foreign transaction fees.

Use the SCRA/MLA to Pay down Your Balances - Fast!

Perhaps the best use of waiving fees through military service is refinancing existing balances through a balance transfer. Using a Citi balance transfer credit card to pay down debt and enjoy a 0% intro APR is an excellent way to reduce monthly payments while eliminating existing debt.

Even better, cardmembers might avoid the regular balance transfer fee of $5 or 5%, whichever is greater. For example, a $2,500 balance transfer would incur a $125 fee. Eliminating this extra fee can save you some serious money – now and into the future.

Using cards like the Citi Simplicity® Card or Citi® Diamond Preferred® Card, the bank’s two balance transfer credit cards, can help military families pay down debt while enjoying an exceptionally-low APR (and not just during active deployment).

The cards are popular thanks to their exceptionally low APR, lengthy intro APR periods – currently an entire year on purchases, and an industry-leading 21 months of 0% intro APR on balance transfers. Also, no balance transfer fees and eliminating debt became that much easier (with financial responsibility and a good repayment gameplan, of course).

Related Article: What is the Longest 0% APR Credit Card?

Featured image by  ArmyAmber/Pixabay

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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