Posted on February 11, 2015
I happen to know a lot of men and women in the military. Weird, huh? Anyway, this post will talk about what cards you need to have if you’re in the military.
Credit cards companies will give service members benefits based on the Servicemembers Civil Relief Act. In this act, there are certain stipulations protecting service members. In this post, we’ll cover two of them that apply to credit cards.
Interest Rate Cap
Most of them don’t apply to this site (terms to break a lease, terminate cell phone bill, etc.). However, there’s one very specific part of this act that can be HUGE for military members if utilized correctly.
§ 527. Maximum rate of interest on debts incurred before military service [Sec. 207]
(a) Interest rate limitation. (1) Limitation to 6 percent. An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember’s spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent – (A) during the period of military service and one year thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage; or 15 (B) during the period of military service, in the case of any other obligation or liability.5
(Bolding and Underlining is mine)
This specific reference can apply to credit card interest. As with a lot of people in the US, many members of the military have credit card debt. Under this section, your credit card can be capped at 6% (unlike many cards that come with 15-21% interest).
Of course, there is a caveat. This interest cap is applied only to debt incurred before joining the military. Every credit card company (I can personally vouch for all of them – except discover), will change your maximum interest to 6% on charges incurred before your enlistment/oath of office and continue to keep you at a maximum of 6%.
Still following? Here’s an example: I get the Chase Sapphire Preferred and charge up $1,000 on it. A year later, I join the military, and still have a balance on my card. I call Chase and tell them I’m in the military. They run my information, get back to me in 3 weeks (they say – I got an email saying I qualified in about a week) and give me a refund of all interest that was collected in excess of 6% over that year period. I personally had hundreds of dollars refunded to me between this card and my Southwest Rapid Rewards credit card.
Furthermore, if you got these cards before you joined the military, they will be capped at 6% interest until you’re no longer in the military. Although the cap is 6%, most companies, including Chase, American Express, and Capital one, among others, will put your interest cap at only 4%. That’s AWESOME.
Waiving Annual Fees
Along with the interest cap, and not included in the terms of the SCRA (so it’s very generous!), many card companies will waive your annual fees! Along with this, some companies will waive late payment fees, over-limit fees, and returned payment fees, but we won’t talk about these, because you shouldn’t be doing any of that anyway!!
All credit cards companies will waive your annual fees for cards that were opened before you joined the military (same as above).
Now, there are some companies that go even above and beyond this general “baseline” of waived fees and 6% interest on cards prior to military enrollment.
Both Capital One and American Express will waive your annual fee on cards you got after your enrollment in the military. For example: I joined in May of 2012. I could apply for a card in July of 2013, call AMEX, and they would start waiving my annual fee, no matter the fee.
With this all said, here are the cards you need to have:
(We do not receive any compensation from any of these links!)
1. American Express Mercedes Benz Platinum Card (the one on the right)
That’s it folks! I can keep going down the rabbit hole of cards, but I wanted to focus this post on cards and their benefits for military members! As you can probably tell, American Express does the very best job between card benefits and benefits for service members!