Special Rules Apply to Military Credit Cards

In 2003 financial protection for service personnel with military cards was passed in the form of the Servicemembers’ Civil Relief Act. This was an update of a law passed originally in 1940 to ease the burden of debt on those serving in the military.

The update was necessary due to the calling up of thousands of Reservists and members of the National Guard to fight the wars in Iraq and Afghanistan. Under the SCRT, there is a 6% interest rate cap that must apply for any debt or loans military members have incurred prior to being classified for active duty.

This limit applies to loans, credit card debts, renewals and fees (excepting insurance) and is available if the service member requests it in writing. A copy of military orders must be included as proof of activation.

Additional Financial Protections for Military Personnel

The SCRA not only limits interest rates on debt that can be charged while you are on active duty. It also can reduce mortgage interest, delay bankruptcy or foreclosure filings, and protect you from eviction.

An addition to the old law in 2003 prohibits credit bureaus from listing adverse affects on credit as a result of using this law.

Limits on Credit Lenders Issuing Military Cards

The law is especially protective of active duty service men and woman when they exercise their rights under the law to reduce payments and interest. Any interest rate reductions are write-offs and cannot be re-added later by the lender.

Lenders cannot use the law to claim a service member is unable to pay his debts and cannot deny or revoke credit of someone utilizing the bill’s protections.

The interest rate reduction cannot be used by lenders as an excuse to change other terms of the credit card agreement or to refuse to grant credit.

The service member’s credit report cannot be adversely affected if he reduces his payments and interest and uses other provisions of this law to protect his financial well being.

How to Qualify?

The SCRA law is meant to allow you to serve in the active military without the worry of debt that was accumulated while you were on inactive status.

If you are looking for a new military card, there is one large hurdle to overcome. Credit card lenders require a permanent address.

Those active in the military often have only an address with a box number. Thus, service members on active duty need to search for lenders who actively promotion a credit cards specifically designed for military as they are indicating a willingness to overcome the problems of addresses that can change frequently.

Using the internet to find and compare military offers is a time effective method for those too busy to spend hours calling various lenders.

Choosing The Ideal Card

If you do not plan to carry a balance from one month to the next the best choice for you may be a no-fee credit card that offers rewards and charge no interest on balances paid in full monthly.

You may face high interest rates if you forward balances and pay only the minimum due each month. Look for the lowest interest rates that are guaranteed to remain the same for the life of the balance.

Credit card penalty fees have risen drastically in recent years and those apply to military cards just as to any other credit card account.

The best option might be to have a no-fee credit card you pay off monthly and add a second credit card to use for a revolving balance if needed for special purchases that must be paid over time.

The USAA American Express Card and USAA World MasterCard offer no annual fees and rates as low as 8.9% APR. Rewards can be chosen as cash back, gift cards or travel rewards.

If you cannot qualify for a traditional credit card, an alternative is the Military Star card offered by military exchanges.

This card can be use at any military exchange and a MasterCard version is also available offering low interest rates and a good rewards program.


Active military personnel have some protections under the law to help them avoid financial worries while serving their country around the world.

You must request the protections and interest rate reductions as they are not automatic and you will be required to provide proof of active duty status.

For a new military card, search online for special offers of high rewards and low interest rates for service members. Consider also first time cards as well!