You make countless sacrifices to serve and protect our nation as an active-duty military member. But did you know that laws exist to help protect your financial well-being while you’re serving?
The Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA) offer a range of benefits and protections designed to alleviate financial stress and provide peace of mind for our military heroes.
This comprehensive guide will explore the SCRA and MLA, examining the benefits they offer, who qualifies, and how to take advantage of these protections. Let’s dive in!
Understanding the SCRA and MLA
Before exploring the benefits and protections offered by the SCRA and MLA, let’s understand these laws and how they differ.
What Is the SCRA?
The Servicemembers Civil Relief Act (SCRA) is a federal law that provides a wide range of financial and legal protections to active-duty military members. Congress originally enacted it in 1940 and has updated and expanded the SCRA over the years to better serve our military personnel.
The SCRA’s primary goal is to allow servicemembers to focus on their military duties without worrying about financial or legal issues back home.
What Is the MLA?
The Military Lending Act (MLA) is another federal law that works in conjunction with the SCRA to protect military members from predatory lending practices. E
nacted in 2006, the MLA caps interest rates on many types of consumer loans at 36% and prohibits lenders from requiring servicemembers to submit to mandatory arbitration or waive their rights under the SCRA.
Key Differences Between SCRA and MLA
While both the SCRA and MLA offer financial protections for servicemembers, some key differences exist between the two laws:
- The SCRA primarily applies to debts and obligations incurred before entering active duty, while the MLA covers new loans and credit extended to active duty members.
- The SCRA offers a broader range of protections, including legal and housing protections, while the MLA focuses specifically on consumer lending practices.
- The MLA caps interest rates at 36% for covered loans, while the SCRA caps interest rates at 6% for pre-service debts.
SCRA and MLA Credit Card Benefits
One of the most significant benefits offered by the SCRA and MLA is the protection they provide for credit card accounts. Let’s take a closer look at some of the key credit card benefits you can expect under these laws.
Reduced Interest Rates (APR)
Under the SCRA, credit card issuers must cap interest rates at 6% for debts incurred before entering active duty. This protection applies to all types of credit card debt, including balances carried over from month to month.
To qualify for the reduced interest rate, you must provide your credit card issuer with a copy of your military orders and a written request for the rate reduction.
The MLA, on the other hand, caps interest rates at 36% for new credit card accounts opened while you’re on active duty. This protection is automatic and does not require you to submit a request to your credit card issuer.
Waived Annual Fees
Many credit card issuers waive annual fees for active-duty servicemembers, exceeding the requirements of the SCRA and MLA.
This benefit can save you hundreds of dollars per year, especially if you have premium credit cards with high annual fees such as American Express Platinum Card® or the Chase Sapphire Reserve®. This is a major perk considering many of these cards offer hundreds of dollars in credits and airport lounge access.
To take advantage of this benefit, you must contact your credit card issuer and provide proof of your active duty status. Some issuers may require you to reapply for the fee waiver each year, while others will automatically extend the benefit for the duration of your active duty service.
Other Potential Benefits
In addition to reduced interest rates and waived annual fees, some credit card issuers offer additional benefits for servicemembers under the SCRA and MLA. These may include:
- No foreign transaction fees.
- Waived cash advance fees.
- Waived late payment fees.
- Waived balance transfer fees.
- Specialized customer service for military members.
- Extended warranty protection on purchases.
It’s worth noting that these benefits vary by issuer, so contact your credit card company directly to learn more about the specific benefits they offer.
Who Is Eligible for SCRA and MLA Protection?
Now that we’ve covered some of the key benefits offered by the SCRA and MLA, let’s examine who is eligible for these protections.
SCRA Eligibility
The SCRA applies to the following servicemembers:
- Active-duty members of the Army, Navy, Air Force, Marine Corps, and Coast Guard.
- Commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration.
- Reservists and National Guard members called to active duty for more than 30 consecutive days.
- Servicemembers absent from duty due to sickness, wounds, leave, or other lawful cause.
MLA Eligibility
The MLA applies to the following borrowers:
- Active-duty members of the Army, Navy, Air Force, Marine Corps, and Coast Guard.
- Active-duty members of the National Guard and Reserves.
- Active-duty commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration.
Eligible Dependents
In addition to servicemembers themselves, certain dependents may also be eligible for protection under the SCRA and MLA. These include:
- Spouses of active-duty servicemembers.
- Children of active-duty servicemembers.
- Other dependents of active-duty servicemembers, such as parents or siblings who rely on the servicemember for financial support.
How to Request SCRA and MLA Benefits
If you’re eligible for SCRA or MLA benefits, you’ll need to take some proactive steps to request these protections from your credit card issuer. Here’s what you need to know.
The Application Process
The application process for SCRA and MLA benefits varies by credit card issuer but generally involves the following steps:
- Contact your credit card issuer and inform them of your active duty status.
- Provide proof of your active-duty status, such as a copy of your military orders or a letter from your commanding officer.
- Request the specific benefits you’re seeking, such as a reduced interest rate or waived annual fee.
- Wait for your credit card issuer to review your request and apply the requested benefits to your account.
Documentation Requirements
To qualify for SCRA and MLA benefits, you must provide your credit card issuer with adequate documentation of your active duty status. This may include:
- A copy of your military orders.
- A letter from your commanding officer confirming your active duty status.
- A copy of your Leave and Earnings Statement (LES) showing your current pay grade and duty status.
- A copy of your military ID card.
Your credit card issuer may have specific documentation requirements, so ask what they need to process your request.
Contacting Your Credit Card Issuer
Each credit card issuer has its own process for handling SCRA and MLA requests, so you’ll need to contact them directly to learn more. Here are some common ways to get in touch:
- Call the customer service number on the back of your credit card.
- Visit your credit card issuer’s website and look for information on military benefits.
- Send a written request to your credit card issuer’s military benefits department.
- Visit a branch location and speak with a representative in person.
When contacting your credit card issuer, be prepared to provide your account information, proof of your active duty status, and specific details about the benefits you’re requesting.
Major Credit Card Issuers and Their SCRA/MLA Programs
While all credit card issuers are required to comply with the SCRA and MLA, some go above and beyond to offer additional benefits and support for servicemembers. Here’s a quick overview of some of the major credit card issuers and their SCRA/MLA programs:
American Express
American Express offers a range of benefits for servicemembers, including waived annual fees on all credit cards, reduced interest rates, and specialized customer service. They also offer a dedicated website for military members with information on benefits and resources.
Chase Bank
Chase offers reduced interest rates and waived fees for servicemembers under the SCRA and MLA. They also have a dedicated military banking team available to assist with questions and concerns.
Citi
Citi offers reduced interest rates, waived fees for eligible servicemembers, and a dedicated customer service line for military members.
Capital One
Capital One provides SCRA and MLA benefits for eligible servicemembers, including reduced interest rates and waived fees. They also offer a dedicated military affairs team to assist with questions and concerns.
Discover
Discover offers SCRA and MLA benefits for eligible servicemembers, including reduced interest rates, waived fees, and specialized customer service.
Navy Federal Credit Union
As a credit union serving the military community, Navy Federal offers a range of benefits for servicemembers, including reduced interest rates, waived fees, and specialized products and services.
USAA
USAA is a financial services company that exclusively serves military members and their families. They offer a range of benefits for servicemembers, including reduced interest rates, waived fees, and specialized products and services.
Wells Fargo
Wells Fargo offers SCRA and MLA benefits for eligible servicemembers, including reduced interest rates and waived fees. They also have a dedicated military affairs team available to assist with questions and concerns.
Additional Benefits and Protections Under the SCRA
In addition to credit card benefits, the SCRA offers a range of other protections for servicemembers. Here are some of the key areas where the SCRA can provide relief:
Mortgage and Housing Protections
Under the SCRA, servicemembers may be eligible for the following mortgage and housing protections:
- Foreclosure protection: Lenders must obtain a court order before foreclosing on a servicemember’s property during active duty and for one year after.
- Eviction protection: Landlords must obtain a court order before evicting a servicemember or their dependents during active duty.
- Lease termination: Servicemembers may terminate housing leases without penalty if they receive permanent change of station (PCS) orders or deploy for 90 days or more.
Legal Proceedings and Protections
The SCRA provides several protections for servicemembers involved in legal proceedings, including:
- Default judgment protection: Courts must appoint an attorney to represent servicemembers in default judgment proceedings.
- Stay of proceedings: Servicemembers may request a stay of legal proceedings during active duty and for 90 days after.
- Statute of limitations: The SCRA tolls (pauses) the statute of limitations for legal proceedings during active duty.
Insurance Protections
The SCRA offers several protections related to insurance, including:
- Life insurance: Servicemembers may request deferment of life insurance premiums for the duration of their active-duty service.
- Health insurance: Upon returning from active duty, servicemembers may reinstate their health insurance coverage without waiting periods or exclusions.
- Professional liability insurance: Servicemembers may suspend professional liability insurance during active duty without penalty.
Other SCRA Benefits
Other key benefits and protections offered by the SCRA include:
- Tax relief: Servicemembers may defer income tax payments due before or during active duty if their ability to pay is materially affected by their service.
- Termination of auto leases: Servicemembers may terminate auto leases without penalty if they receive PCS orders or deploy for 180 days or more.
- Termination of cell phone contracts: Servicemembers may terminate cell phone contracts without penalty if they relocate for at least 90 days to an area not covered by the contract.
Frequently Asked Questions (FAQs)
How Long Do SCRA Benefits Last?
SCRA benefits typically last for the duration of your active-duty service and for a period of time after you leave active duty, depending on the specific benefit. For example, the 6% interest rate cap applies during active duty and for one year after, while foreclosure protection lasts for one year after active duty.
Can I Use SCRA Benefits If I'm in the National Guard or Reserves?
Yes, National Guard members and Reservists called to active duty for more than 30 consecutive days are eligible for SCRA benefits during that period of active duty.
Does the SCRA Cover Student Loans?
Yes, the SCRA provides interest rate caps and other protections for student loans incurred before entering active duty. However, these protections may vary depending on your student loan type (federal vs. private). Contact your loan servicer for more information.
The Verdict
The Servicemembers Civil Relief Act (SCRA) and Military Lending Act (MLA) offer a range of powerful protections and benefits for active-duty military members.
From reduced interest rates and waived fees on credit cards to foreclosure protection and legal assistance, these laws help ease the financial burdens of military service.
By understanding your rights and taking proactive steps to request these benefits, you can focus on your military duties with greater peace of mind, knowing that you and your family are protected.
